MES ASMABI COLLEGE, P VEMBALLUR

THIRD SEMESTER B.Com Computer Application FIRST INTERNAL EXAMINATION, JULY 2018.

CORPORATE ACCOUNTING

Time: 2 hours Mark:50

I. Fill in the Blanks Each Question Carry one Mark.

1. Under double account system, fixed assets are shown at .................................

2. No journal entry is required for the cancellation of....................share capital.

3. ................shares are always fully paid.

4. Preference shares cannot be redeemed unless they are...............................(4*1=4)

II. Short Answer question. Each question carries 2 marks.

5. What is Double Account System?

6. What is alteration of share capital?

7. What do you understand by Buyback of shares?

8. What is escraw account?

9. What is stock split?

10. The nominal value of equity shares if a company is ₹.10 and the current market price is ₹.40. The company issues right shares at the rate of one equity share for every 2 existing shares held, the right share being issued at a premium of 10%?

11. What are redeemable preference shares?

12. Hindustan Construction Company ltd. had 5,000 8% Redeemable Preference Shares of ₹.100 each, fully paid up.

The company decided to redeem these preference shares at par by the issue of sufficient number of equity shares of ₹.10 each fully paid up at par.

You are required to pass necessary journal entries including cash transactions in the books of the company. (8*2=16)

III. Short Essay question. Answer any four questions. Each question carries 5 Mark

13. Distinguish between double account system and single account system?

14. Following figures have extracted from the books of Metals Product Ltd. as on 31^st March, 2018. Paid up Capital 9,00,000 Equity shares of ₹.10 each ₹.90,00,000; General Reserve ₹.15,00,000; Surplus A/c ₹.5,00,000; Securities Premium Account ₹.3,00,000; 14% Debentures ₹10,00,000; Bank balance ₹.20,00,000.

The company decided to buy back 25% of the paid up equity share capital at face value. It was also decided to issue further 14% debentures of ₹.10,00,000 at par for the purpose of buyback of shares. Journalise the above transactions relating to buyback of shares.

15. A company has issued 2,00,000 6% redeemable preference shares of ₹.100 each. They were to be redeemed on 31^st December, 2017. A General Reserve of ₹.1,50,000 had already been built up out of past profits. For the purpose of redemption, 75,000 new 5% preference shares of ₹.100 were offered to the public at a premium of ₹.50, payable in full on application. The new issue is fully subscribed and paid for. Thereupon 6% redeemable preference shares were redeemed. Journalise the above transactions.

16. The following are the extracts from the draft balance sheet of Omega Tools Ltd. as on 31^st December, 2018.

Authorised Capital:1,00,000 equity shares of ₹.1,00,000 equity shares of ₹.10 each - ₹.10,00,000

Issued, called-up and paid up capital: 80,000 equity shares of ₹.10 each of which ₹.5 per share is paid up -₹.4,00,000

Security premium ₹.1,00,000; General Reserve ₹.3,50,000; Profit and Loss ₹.1,50,000

A resolution was passed declaring a bonus to be provided as follows:

₹.2,50,000 out of General Reserve and balance from other sources so as to make all partly paid shares as fully paid. Set out journal entries to give effect to the resolution stated above.

17. How will you calculate value of right?

18. XYZ Company Ltd. has decided to issue right shares to its existing shareholders in proportion to one share for every five shares held at premium of ₹.50 for a nominal value of ₹.100 per share. Calculate the market value of the right if the market value of the share at the time of announcement of right issue by the company is ₹.250. (4*5=20)

IV. Essay questions. Each question carry 10 mark

V. 31^st March, 2018.

₹

₹

Equity shares

164700

Debentures

60000

Sundry creditors on open accounts

300

Depreciation Fund

75000

Capital Expenditure to 31-3-2017

285000

Capital Expenditure on during 2017-18

18300

Sundry Debtors for current supplied

12000

Other Debtors

150

Stores in hand

1500

Cash in hand

1500

Cost of generation of electricity

9000

Cost of distribution of electricity

1500

Rent Rates and Taxes

1500

Management expenses

3600

Depreciation

6000

Interest on Debentures

3000

Interim dividend

6000

Sale of current

39000

Meter rent

1500

Balance of Net Revenue Account on 1^st April, 2017

8550

Total

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349050

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349050

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Prepare (a) Capital Account (b) Revenue Account (c) Net Revenue Account and (d) General Balance sheet from the above trail balance (1*10=10)