S.No.

629 19PCM10/
19PCZ09
(For the candidates admitted from 2019–2020 onwards)

M.Com./M.Com. (CA) DEGREE EXAMINATION,

JANUARY 2022.

Third Semester

ADVANCED CORPORATE ACCOUNTING

Time : Three hours Maximum : 75 marks

PART A — (15 × 1 = 15 marks)

Answer ALL questions.

1. Discount on issue of share is

(a) Current asset
(b) Current liability
(c) Fictitious asset
(d) Tangible asset

2. Premium on redemption of preference shares

should be cancelled by utilizing
(a) Share premium a/c
(b) P & L a/c
(c) General reserve a/c
(d) Capital reserve a/c
3. Premium on redemption of Debentures account is
–––––––––––
(a) Personal account (b) Real account
(c) Nominal account (d) All of the above

4. Payment of wages and salaries is shown in the

statement of profit and loss under
(a) Employees benefits expenses
(b) Other expenses
(c) Finance cost
(d) None of these

5. Preliminary expenses written off is shown in the

statement of profit and loss under
(a) Employees benefits expenses
(b) Other expenses
(c) Finance cost
(d) Depreciation and amortization expense

6. Debentures redeemable after 10 years of issue are

shown as
(a) Long term borrowing
(b) Short term borrowings
(c) Other current liabilities
(d) None of these

2 S.No. 629
7. When there are two or more liquidations and one
formation, it is known as
(a) Amalgamation
(b) Absorption
(c) Internal reconstruction
(d) External reconstruction

8. An existing company take over another company

which is going to be liquidated is called
(a) Absorption
(b) Amalgamation
(c) External reconstruction
(d) Internal reconstruction

9. Accounting standard for amalgamation is

(a) AS-8 (b) AS-20
(c) AS-14 (d) AS-3

10. Which amount should be paid first?

(a) Debentures
(b) Preferential creditors
(c) Liquidation expenses
(d) Liquidators remuneration

3 S.No. 629
11. The fixed assets of an insurance company are
shown in
(a) Schedule 6 (b) Schedule 7
(c) Schedule 8 (d) None of these

12. Contributory is a
(a) Creditor
(b) Share holder
(c) Debenture holder
(d) Outsiders

13. A sub-standard Asset is one which has remained

NPA for a period
(a) Not exceeding 18 months
(b) Less than 12 months
(c) More than 12 months
(d) None

14. Provisions for income tax is shown in the bank

accounts under the head:
(a) Borrowings
(b) Other liabilities
(c) Operating expenses
(d) Contingent liabilities

4 S.No. 629
15. Claim paid by Life Insurance Company is shown
in

(a) Schedule 1

(b) Schedule 2

(c) Schedule 3

(d) Schedule 4

PART B — (2 5 = 10 marks)

Answer any TWO questions out of Five.

16. X Ltd., had earned Rs.6,00,000 profit on

31.12.2007 which is appropriated as follows:

(a) Rs.50,000 towards debenture redemption

fund

(b) 8% preference dividend (tax free), tax-being

20% on Rs.6,60,000

(c) 10% ordinary dividend, tax being 20% on

20,00,000

(d) Rs.74,000 to general forward

(e) Balance to be carried forward

Prepare Profit and Loss Appropriation a/c.

5 S.No. 629
17. Kumar Company Ltd passed necessary resolution
and received sanction of the court for the
reduction of its share capital by Rs.2,50,000 for
the purpose encumerated here under

(a) To write off the profit and Loss account

Rs.1,05,000

(b) To reduce the value of plant and Machinery

by Rs.45000 and of goodwill by Rs.20,000

(c) To reduce the value of investments to market

value by writing off Rs.40,000.

The reduction was made by converting 25,000

Preference shares of Rs.20 each fully paid to the
same number of Preference Shares of Rs.15 each
fully paid and by converting 25,000 equity shares
of Rs. 20 each Rs.15 paid up into 25,000 equity
shares of Rs.10 each fully paid. Show journal enter
necessary in relation to the reduction of share
capital.

18. Distinguish between internal and external

reconstruction.

6 S.No. 629
19. The following particulars relate to a limited
company which has gone into voluntary
liquidation. Prepare the liquidators final account
allowing for his remuneration at 2% on the
amount realized and 2% on the amount
distributed among unsecured creditors other than
preferential creditors.
Rs.
Preferential creditors 10,000
Unsecured creditors 32,000
Debentures 10,000

The assets realised the following sums :

Rs.
Building 20,000
Machinery 18,650
Furniture 1,000
The liquidation expenses amount to Rs. 100

20. Prepare profit and Loss a/c for the year ended
31-03-2017 of Aarthy Bank Ltd
Particulars Rs. Particulars Rs.
Interest on loan 350 Interest on overdraft 70
Director fee 20 Rent taxes Insurance 5

7 S.No. 629
 Particulars Rs. Particulars Rs.
Interest on cash credit 160 Interest on fixed 190
Deposit
Payment to Employees 150 Discount on Bills 50
discounted
Interest on savings a/c 150 Audit fee 10
Commission exchange 25
and brokerage

PART C — (5 10 = 50 marks)
Answer ALL questions.

21. (a) Bharat Co. Ltd., has Rs.3,00,000 12%

debentures on 01.04.1998. There is no sinking
fund for redemption of debentures. Interest is
payable on 31st March each year.

(i) On 31.05.1998, Rs.20,000 own

debentures are purchased at Rs.94 by the
company and immediately cancelled.

(ii) On 01.08.1998, Rs.50,000 own

debentures are purchased at Rs.95 and
held as investment (ex-interest)

8 S.No. 629
 (iii) On 01.12.1998 Rs.60,000 own debentures
are purchased at Rs.96 and held as
investment (cum-interest)
(iv) On 31.03.1999, own debentures kept as
investment are cancelled.
Show journal entries in the books of the
company. Date of closing is 31st March.
Or
(b) Samy Ltd, issued 6% debentures for
Rs.12,00,000 on 1.1.2014. It was provided in
the debenture trust deed that the debentures
are repayable at the end of 2016 with a
premium of 10%. A sinking fund was set up
to provide cash for the redemption on the due
date. The amount set aside annually are to be
invested in 5% government bounds. Sinking
fund tables show that 0.31720856 at 5%
compound interest in 3 years will become
Re.1.
You are required to write the ledger
accounts for all the 3 years in the company’s
book calculations may be made to the nearest
rupee.

22. (a) Prepare a Balance sheet as at 31st March

2000 from the following information of ABC
Ltd as required under the Companies Act
1956.
9 S.No. 629
 Rs. Rs.
Term Loan 10,00,000 Loss for the 3,58,000
year
Creditors 11,45,000 Sundry 12,25,000
Debtors
Advances 3,72,000 Loan from 2,00,000
Directors
Cash and Bank 2,75,000 Provisions for 20,200
Balances doubtful debts
Staff advances 55,000 Stock 4,00,000
Provision for 1,70,000 Fixed assets 51,50,000
Tax (W.D.V.)
Securities 4,75,000 Finished 7,50,000
premium Goods.
Loose Tools 50,000
Investments 2,25,000
General 20,50,000
Reserve
Capital work in 2,00,000
progress

Additional information :

(i) Share capital consists of

10 S.No. 629
 (1) 30,000 equity shares of Rs. 100 each fully
paid up.

(2) 10,000 - 10% pref.shares of Rs. 100 each

fully paid up.

(ii) Term loan is secured.

(iii) Depreciation on assets : Rs. 5,00,000.

Or
(b) Explain the various items appearing in the
balance sheet.

23. (a) White Ltd agreed to acquire the business to

Green Ltd. as an 31st December 1986, The
balance sheet of Green Ltd on that date was
as follows:
Rs. Rs.

Share capital in 6,00,000 Goodwill 1,00,000

fully paid shares of
Rs.10

General resrve 1,70,000 Land and 6,40,000

buildings

Profit and Loss a/c 1,10,000 Stock 1,68,000

6% Debentures 1,00,000 Debtors 36,000

11 S.No. 629
 Rs. Rs.

Creditors 20,000 Cash 56,000

10,00,000 10,00,000

The consideration payable by White Ltd was

agreed as follows :

(i) A cash payment equivalent to Rs 2.50 for

every Rs.10 shares in Green Ltd.

(ii) The issue of Rs. 90,000, Rs. 10 shares fully

paid in white Ltd having agreed value of
Rs. 15 per share.

(iii) The issue of such an amount of fully paid 5%

Debenture of white Ltd at 96% as is sufficient
to discharge the 6% Debentures of Green Ltd
at a premium of 20%. The directors of white
Ltd valued Land and Buildings at
Rs.8,50,000 and created 5% provision on
debtors. Expenses of Liquidation Rs.6000
were paid by white Ltd.,

Show the calculation of the purchase

consideration and pass acquisition entries in
the books of white Ltd.
Or

12 S.No. 629
 (b) A Ltd company was incorporated on 1993.
The working of the company was not
satisfactory.
The balancesheet of the company on 31-12-1995
was as follows :
Rs. Rs.
Authorised 20,00,000 Land and 1,00,000
capital 20,000 buildings
shares of Rs. 100
each
Subscribed capital 19,00,000 Machinery 2,60,000
19,000 share of
Rs. 10 each
Creditors 1,00,000 Furniture 20,000
Due to Muthu and 1,00,000 Stock 3,70,000
Co.
Debtors 1,80,000
Goodwill 2,00,000
Profit and 9,70,000
Loss a/c
21,00,000 21,00,000

The following scheme of reconstruction was

followed:

13 S.No. 629
 (i) The 19000 shares of Rs.100 each are be
reduced an equal number of fully paid
shares of Rs.40 each.
(ii) The amount Rs.1,00,000 due to Muthu &
Co., was also to be reduced the remaining
1000 unissued shares being issued to
them as fully paid up shares of Rs.40
each in full settlement of the amount due
to them.
(iii) The amount available by the above
reduction is to be utilized in wiping off
the goodwill, profit and Loss a/c and in
writing down the value machinery.
Assuming the above scheme was carried out
pass necessary journal entries and prepare
the Balance sheet.

24. (a) Kannan Ltd was liquidated on 31-12-2001

Balancesheet as on 31-12-2001.
Liabilities Rs. Assets Rs.
Share capital 1,00,000 Land and 60,000
Building
8% Debenture 1,00,000 Plant and 60,000
Machinery
Mortgage Loan 50,000 Stock 60,000
(Secured loan on
Building)
Sundry Creditors 80,000 Debtors 70,000

14 S.No. 629
Liabilities Rs. Assets Rs.
Cash in hand 5,000
Profit and Loss 75,000
a/c
3,30,000 3,30,000
Assets realized as follows:
(i) Land and Building Rs.55, 000
(ii) Stock Rs.20, 000
(iii) Plant and Machinery Rs.25, 000
(iv) Half of the debtors were bad and the balance
realised 60% book value.
(v) Liquidator was entitled to a commission of
3% on amount realised other than cash and
2% on the amount paid to unsecured
creditors.
(vi) Preferential creditors amount to Rs. 10,000
(included in sundry creditors)
(vii) Liquidation expenses amount to Rs. 970.
Prepare liquidators final statement of
account.
Or

(b) The Balance Sheets of A Ltd and B Ltd as on

31st December, 2017 were as follows:

15 S.No. 629
Liabilities A B Assets A B
Ltd Ltd Ltd Ltd

Share capital in Rs. 10 fully 12,000 5,000 Fixed 10,000 6,000

paid shares assets

Equity shares 4,000 1,000 Current 11,5000 2,000

assets

Preference shares 2,500 1,000 Cash at 7,000 1,000

bank

Profit and Loss a/c 10,000 2,000

28,500 9,000 28,500 9,000

On 1st January, 2018, A Ltd acquired 90% of share

capital of B Ltd at 15 per share. Prepare the
consolidated Balance Sheet as on 1st Jan, 2018

25. (a) From the following particulars of Mithilesh

Kumar Bank Ltd. prepare a Balance sheet as
on 31-03-2017 :
Rs.
Authorised capital 10,000
Subscribed capital 9,000
Investments 7,000
Bills discounted 15,000
Profit & Loss a/c (cr) 850

16 S.No. 629
 Rs.
Endorsement on bills for collection 100
Money at call and short notice 11,000
Cash in hand 4,000
Liability for customers for acceptances 5,000
Cash with RBI 6,000
Statutory Reserve 4,000
Cash with State Bank of India 4,000
Letters of credit issued 500
Telegraphic transfer payable 800
Bank draft payable 1,200
Short loans 40
Rebate on bills discounted 10
Acceptance for customers 5,000
Loans and advances 12,000
Cash credit 10,000
Overdraft 1,000
Bills purchased 1,000
Current and deposit accounts 60,000
Investment fluctuation fund 100
17 S.No. 629
 Rs.
Buildings 5,000
Or
(b) From the following particulars you are
required to prepare fire Revenue account for
the year ending 31 March 2017.
Rs. Rs.
Claims 2,80,000 Expenses on 12,68,000
outstanding management
31.3.2017
Claims 1,60,000 Premium 4,84,800
outstanding received
1.4.2016
Commission 8,00,000 Commission 20,000
Claims paid 1,92,000 reinsurance
accepted
Reinsurance 4,80,000 Provision for 16,80,000
premium unexpired Risk
1.4.2016
(Firefund)
Commission on 40,000
reinsurance
ceded
Additional 80,000
provision for
unexpired risk

18 S.No. 629
———————

19 S.No. 629