Corporate Accounting Imp Questions

Subject Code: UCZ3A / UCW3A / UCY3A / UCV3B
CORPORATE ACCOUNTING
Theory Questions: (2 marks)

1. Write few words about Pro-rata allotment.
2. Write Short notes on Sweat Equity Shares.
3. Write Short notes on Capital Redemption Reserve.
4. What is Purchase of Business?
5. State any two items appearing under other income.
6. How will you deal with preliminary expenses in inal accounts of companies?
7. What is the meaning of Internal Reconstruction?
8. When do you calculate ‘Adjusted time ratio’?
9. Write a Short note on Share with Differential Rights.
10. Give the Journal entries for Forfeiture of Shares and Reissue.
11. What are the methods of computing Purchase consideration?
12. State any two items that appear under inance costs.
13. What are tangible assets?
14. What is Future Maintainable Pro it?
15. How do you calculate ‘Average Capital employed’?
16. What is underwriting? What is the need for it?
17. What is a share?
18. State the meaning of
(a) Issue of shares at par
(b) Issue of shares at a premium.
19. List out the expenses which are to be divided on a timely basis while computing pro it prior
to incorporation.
20. State any two items that appear under employees bene it expenses.
21. Write a short note on Shareholder’s Funds.
22. What is Goodwill? State its features.
23. What do you understand by ‘Alteration of share capital’?
24. De ine the term dividend.
25. What is super pro it? How it is Calculated?
26. What is Capital Reduction Account?
27. Enumerate the factors that affect the valuation of goodwill.
28. State the meaning of Non-Current Liabilities.
h ps://www.instagram.com/nitesh_kumar_90
Any doubt WhatsApp: +91 81245 17956
29. State the meaning of Redeemable Preference Shares.

30. Write short notes on Surrendered shares.
Practical Questions: (5 marks)

1. A company issues 10000 equity shares of Rs.10 each at par. The issue was underwritten by
K and company for maximum commission permitted by law. The public applied for and
received 8000 shares.
Give journals in books of company and balance sheet.
2. Good luck Ltd. Invited applications for 20,000 shares of the values of Rs.10 each. The
amount payable is Rs.5 on application, Rs.3 on allotment and Rs.2 balance on calls. The
amount was duly received. Pass necessary journal entries.
3. Babi Ltd. Issued 60,000 shares Rs.10 each to the public on condition that the full amount of
shares will be paid in a lump sum. All these shares were taken up and paid by the public.
Pass necessary journal entries if the shares are issued
(a) at par
(b) at a premium of 10%.
4. Discuss the treatment of the following items with appropriate reasons, while ascertaining
the pro it prior to incorporation;
(a) Bad debts
(b) Discount
(c) Audit fee
(d) Depreciation
(e) Traveller’s commission;
5. A company was registered on 1.7.2017, to acquire the running business of S and Co., with
effect from 1.1.2017. The following was the pro it and loss account of the company on
31.12.2017
Particulars Amount Particulars Amount

To Of ice Expenses 54,000 By Gross Pro it b/d 2,25,0000
To formation expenses 10,000
(written off)
To Stationery and Postage 5,000
To Selling Expense 60,000
To Directors fees 20,000
To Net pro it 76,000
2,25,000 2,25,000
You are required to prepare a statement showing pro it earned by the company in the pre and post
incorporation periods. The total sales for the year took place in the ratio of 1:2 before and after
incorporation respectively.
6. The following particulars have been taken from the balance sheet of Sweta Ltd as on 31 st
March 2016.
Rs.
Share capital
200000 equity shares of Rs.10 each 20,00,000
30000 10% preference shares of Rs.100 each 30,00,000
Capital reserve 25,00,000
Securities premium 4,00,000
General reserve 27,00,000
Pro it and loss a/c 9,00,000
The company has suf icient cash balance. It redeemed the preference shares of a premium of 10%
on 1st April 2016. Pass journal entries in the books of the company.
7. From the following particulars of Ganga Ltd. You are required to calculate the managerial
remuneration in the following situation;
(a) there is only one whole time director;
(b) there are whole time directors;
(c) there are two whole directors, a part time director and manager.
Rs.
Net pro it before provision for income tax and managerial remuneration, 8,70,410
but after depreciation and provision for repairs
Depreciation provided in the books 3,10,000
Provision for repairs of machinery during the year 25,000
Depreciation allowable under schedule XIV 2,60,000
Actual expenditure incurred on repairs during the year 15,000
8. How much maximum remuneration payable to different categories of managerial

personnel?
9. What is Managerial Remuneration? How much Maximum percentage of net pro its payable
to different categories of Managerial Personnel.
10. ML ltd invited applications for 20000 shares of Rs.100 each payable.
Rs.25 on application;
Rs.35 on allotment;
Rs.40 on call.
25000 shares were applied for. The directors accepted applications for 20000 shares and
rejected remaining applications. All moneys were duly received.
Pass Journal Entries and Prepare Bank A/c and Share Capital A/c Ledger Accounts.
11. Vasanth runs a cosmetic store. His net assets on 31st December 2008, amounted to
Rs.3,50,000. After paying rent of Rs.3500 a year and a salary of Rs.13,000 to his manager, he
earns a pro it of Rs.85,000. His landlord is interested in acquiring the business. 15% is
considered to be reasonable return on capital employed. Calculate the value of goodwill by
capitalizing super pro its.
12. The pro its of TA Limited, for the last 5 years were as follows;
Rs.
1994 15,000
1995 18,000
1996 22,000
1997 25,000
1988 27,000
Compute the value of the goodwill of TA Ltd on the basis of 4 years purchase of weighted
average pro its after assigning weighs 1, 2, 3, 4 and 5 serially to the pro its.
13. K Ltd has an issued capital of Rs.5,00,000 in 50000 shares of Rs.10 each, on which Rs.8 per
been called up. The company now decides to reduce the share capital to share of Rs.8 each
fully paid by cancelling the unpaid amount of Rs.2 per share. Pass journal entry.
14. G Limited was formed with an authorized capital Rs.12,00,000 divided into equity shares of
Rs. 10 each, to acquire the business of A and B whose balance sheet on the date of
acquisition as follows.
Liabilities Amount Assets Amount Amount

Capital 6,00,000 Free hold premises 7,00,000
General reserve 4,00,000 Stock 2,00,000
Sundry creditors 2,00,000 Sundry debtors 1,60,000
Provision for bad debts 10,000 1,50,000
Cash at bank 1,50,000
12,00,000 12,00,000
The purchase consideration was agreed upon at Rs.14,00,000 to be paid in Rs. 12,00,000
fully paid equity shares of Rs. 11 and balance in cash. Give journals in the books of G limited
with balance sheet.
15. The balance sheet of Not-So-well Ltd as on 31st Dec 2000 was as follows:
Liabilities Amount Assets Amount

Share capital Fixed assets (including 10,00,000
goodwill Rs.40,000)
3000 cumulative 7% pref. 3,00,000 Investments 15,000
shares of Rs.100 each fully paid.
6000 equity shares of Rs.100 6,00,000 Stock 1,50,000
each fully paid
General reserve 80,000 Sundry debtors 1,85,000
Share premium 10,000 Bank 40,000
Current liabilities
Contingent liabilities (4 years of 4,00,000

dividend on pref. shares)
13,90,000 13,90,000
The directors proposed the following scheme of reconstruction:

(a) The preference shares are to exchange for 3000 8% debentures of Rs.100 each
(b) The dividend arrear is to be settled by issue of 6000 6% preference shares of Rs.10 each
and 600 equity shares of Rs.60 each
(c) Equity shares are to be reduced by Rs.40 each. These shareholders are also to subscribe
for cash one (new) equity share for every 10 shares held
(d) Goodwill is to be written off and ixed assets be reduced by Rs.80,000
(e) Stock to be increased by Rs.4,000. Debtors to be written down by Rs.12,000 and

investment to be written down to their market value of Rs.13,000.
Pass necessary journal entries to give effect to the scheme and prepare balance after the
scheme was carried out on 31.12.2000.
16. Explain:
(a) Partial underwriting
(b) Complete underwriting
(c) Firm underwriting.
17. Raj Ltd. issued 1,20,000 equity shares of Rs. 10 each at par. The issue was underwritten by
Kala & co for maximum commission permitted by law. The public applied for and received
1,00,000 shares. Calculate the commission payable to the underwriters and net liability.
18. AB. Co Ltd has agreed to purchase the business carried on by Raja. For this purpose,
goodwill is to be valued at 4 years purchase of the weighted average pro its of the past ive
years.
The pro its of the previous years were:
2004 — Rs.20,000;
2005 — Rs.22,000;
2006 — Rs.24,000;
2007 — Rs.28,000;
2008 — Rs.30,000.
The appropriate weights to be used are;
2004 — 1;
2005 — 2;
2006 — 3;
2007 — 4;
2008 — 5;
The accounts of the business revealed that;
(a) In the year 2004, a major repair was made in respect of Plant and Machinery and the
amount involved was Rs.5,000. It was agreed that the amount which was changed to
revenue, was to be capitalized for the purpose of valuing goodwill subject to 10%
depreciation on the diminishing balance method.
(b) The closing stock for the same year was overvalued by Rs.2,000
(c) Rs.2,800 managerial remuneration should be provided for.
Calculate the value of Goodwill of the business.
19. Explain the methods of ascertaining pro it or loss prior to incorporation.
20. From the following information, you are required to ind out;
(a) The minimum fresh issues of shares;
(b) The amount of issue. Redeemable preference shares to be redeemed Rs.4,00,000
Premium of redemption; 10 %: Divisible pro it available — Rs.80,000. Fresh issue of equity
of shares of Rs. l0 each is to be made at 25% premium.
Comprehensive Questions: (10 marks)

1. Aarti limited issued 2000 shares of Rs. 100 each at a premium of 10% payable as follows. Rs.
25 on application and Rs. 35 on allotment including premium, Rs. 20 on irst call, Rs. 30 on
second call. 1800 shares were applied for and allotted. All money was received with the
exception of irst and inal call on 200 shares held by Raghu. These shares were forfeited. Give
journals and balance sheet.
2. Reefers Ltd made a public issue of 80000 equity shares of Rs.10 each. The entire issue was
underwritten by ive underwriters as follows: P-25%, Q-15%, R-10%, S-30%, T-20%.
Applications bearing the rubber stamp of an underwriter are to be applied in relief of his
liability. As result of the issue, the following applications were received:
(a) Bearing Stamp of P for 11,000 shares
(b) Bearing stamp of Q for 8200 shares
(c) Bearing stamp of R for 7400 shares
(d) Bearing stamp of S for 6600 shares
(e) Bearing stamp of T for 6800 shares.
Not bearing stamp 24000 shares. Find the liability of individual underwriters.
3. Good Prospects Ltd issued 40000 shares, of Rs.10 each at a premium of Rs.2 per share. The
share was payable as follows: Rs.2 on application, Rs.5 on the allotment (including premium
Rs. 5 on irst and inal call. All the shares were applied for and allotted. All moneys were
received with the exception of the irst and inal call on 1000 shares which were forfeited. 400
of these were reissued as fully paid at Rs.8 per share.
Give the necessary journal entries. Prepare balance sheet of the company.
4. X Ltd had issued 20000 equity shares of Rs. 100 each fully paid and 12,000 redeemable
preference shares of Rs. 100 each fully paid. On 31st Dee 1997, the pro it and loss account
showed an undistributed pro it of Rs. 2,00,000 and general reserve account stood at Rs.
5,60,000. On 1.1.98 the directors decided to issue 6000 9% preference shares of Rs. 1,000 each
and redeem the existing redeemable preference shares of Rs. 110 each utilizing as less pro its
as possible for the purpose.
Pass necessary journal entries to record the above transactions. There was a bank balance of
Rs. 8,00,000 on that date.
5. Discuss the treatment of the following items with appropriate reasons, while ascertaining the
pro it prior to incorporation;
(a) Salaries (b) Depreciation (c) Directors Fees (d) Audit Fees
(e) Preliminary Expenses Written off; (f) Debenture Interest (g) Rent (h) Discount
(i) Selling Expenses (j) Interest Paid to vendors.
6. Write note on any four important contents of balance sheet prescribed under Schedule-VI.
7. Give the format of balance sheet as per Revised Schedule VI.
8. From the following particulars of Ganga Ltd. You are required to calculate the managerial
remuneration in the following situation;
(a) there is only one whole time director.

(b) there are whole time directors;
(c) there are two whole directors; a part time director and manager.
Net pro it before provision for income tax and managerial 9,56,580
remuneration, but after depreciation and provision for repairs
Depreciation provided in the books 2,50,000
Provision for repairs of machinery during the year 30,000
Depreciation allowable under schedule XIV 3,60,000
Actual expenditure incurred on repairs during the year 15,000
9. The balance sheet of James company ltd, as on 31st December1998 was as follows:
20000 shares of Rs. 10 each 2,00,000 Land & buildings 1,68,000
Pro it and loss a/c 40,000 Plant & Machinery 1,20,000
Debentures 30,000 Furniture & ittings 10,000
Trade creditors 40,000 5% (tax free) Govt. Bonds 40,000
Provision for taxation 18,000 Stock 4,000
Proposed dividend 30,000 Book debts 12,000
Cash 4,000
3,58,000 3,58,000
The net pro its of the company after charging depreciation and taxes were as follows:
1994 — Rs. 34,000; 1995 — Rs. 38000; 1996 — Rs. 36,000; 1997 — Rs. 40,000; 1998 — Rs.
38,000; On 31st December 1998, Land and buildings were revalued at Rs. 1,90,000; Plant and
Machinery at Rs. 1,42,000 and furniture and ittings at Rs.8,000; 10% represent a fair
commercial rate of return on investment in the company.
Calculate the value for goodwill basing it at ive years purchase of the average super pro its for
the last ive years.
10. The balance sheet of Jupiter Electronic Ltd, as on 31st March 2016 as under.

Share capital 1,00,000 Land and Buildings 93,500
Pro it and loss a/c 29,500 Plant and Machinery 60,000
Debentures 15,000 Furniture and Fittings 5,000
Trade creditors 20,000 Stock 2,000
Provision for tax 9,000 Bad debts 6,000
Proposed dividend 15,000 Cash 2,000
Preliminary expenses 20,000
1,88,500 1,88,500
The net pro its of the company and weights to be assigned were;
2012-13 – Rs.16,000; 2013-14 –Rs.21,000; 2014-15- Rs.20,000 2015-16 – Rs.19,000
The normal rate of return on investment is 10%.
Find out the value of goodwill based on ive years of purchase of the average super pro its of
the last four years.
11. Explain the different kinds of ‘Alteration of Share Capital’ which do not require approval of a
court of a law.
12. Explain the various methods of valuation of shares.
13. The balance sheet of Himalaya Ltd as on 31st March 2016 as below. The capital reduction
scheme as approved by the court is as follows;
10,000 9% preference shares of Rs. 1,00,000 Land and Buildings 2,80,000
10 each
50,000 equity shares of Rs.10 each 5,00,000 Plant and machinery 75,000
General reserve 40,000 Furniture 30,000
10% debentures of Rs. 100 40,000 Preliminary Expenses 2,000
Bank overdraft 57,000 P & L a/c 2,50,000
Creditors 80,000 Goodwill 1,80,000
8,17,000 8,17,000
The capital reduction scheme as approved by the court is as follows;

(a) The holders of 10% debentures of Rs 100 are given 12% debentures of Rs.50 and preference
shares of Rs. 10 each for the balance amount.
(b) All the preference shares, including the preference shares given to debenture holders are to be
reduced to Rs.6. The dividend rate is to be increased to 11%.
(c) Equity shares are to be reduced to Rs.2 each.
(d) Additional equity shares of Rs.2,00,000 for cash are issued to repay the bank overdraft.
All intangible and ictitious assets are written off.
Machinery and furniture are written off in proportion to book values, by making use of the
Reconstruction A/c, and general reserve.
Pass necessary journal entries in the books of the company to record the above transactions
prepare the company’s balance sheet after such changes.

Corporate Accounting Imp Questions

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Corporate Accounting Imp Questions

Uploaded by

Copyright:

Available Formats

Subject Code: UCZ3A / UCW3A / UCY3A / UCV3B

Theory Questions: (2 marks)

29. State the meaning of Redeemable Preference Shares.

Practical Questions: (5 marks)

Particulars Amount Particulars Amount

8. How much maximum remuneration payable to different categories of managerial

rejected remaining applications. All moneys were duly received.

Liabilities Amount Assets Amount Amount

Liabilities Amount Assets Amount

Contingent liabilities (4 years of 4,00,000

The directors proposed the following scheme of reconstruction:

(e) Stock to be increased by Rs.4,000. Debtors to be written down by Rs.12,000 and

19. Explain the methods of ascertaining pro it or loss prior to incorporation.

Comprehensive Questions: (10 marks)

7. Give the format of balance sheet as per Revised Schedule VI.

remuneration in the following situation;

(a) there is only one whole time director.

Liabilities Amount Assets Amount

The capital reduction scheme as approved by the court is as follows;

You might also like