(1) U(5th Sm.)-Corporate Acct.-H/DSE-5.

2A/CBCS

2021
CORPORATE ACCOUNTING — HONOURS
Paper : DSE-5.2A
Full Marks : 80

The figures in the margin indicate full marks.

Candidates are required to give their answers in their own words
as far as practicable.

Group - A
Answer any four questions.

1. The Balance Sheet of X Ltd. reflected the following balances :

Equity shares of ` 10 each, ` 8 per share
(called up and paid up) ` 8,00,000
Capital Redemption Reserve ` 1,50,000
Securities Premium (fully realized) ` 50,000
Surplus in statement of Profit and Loss ` 1,60,000
Capital Reserve (fully realized in cash) ` 80,000
General Reserve ` 4,80,000
The Board of Directors resolved the following :
(i) To make a call of ` 2 per share to the equity shareholders.
(ii) To issue three Bonus shares for every five equity shares held.
(iii) To utilise General Reserve as minimum as possible.
(iv) To issue 40000 Right shares of ` 10 each fully paid up at ` 13 per share to its equity shareholders.
Assuming that all call moneys were collected in due time and the right shares were duly taken up by the
shareholders, pass necessary journal entries in the books of the company. [Narration not required] 10

2. P Ltd. granted option for 8000 equity shares on October 1, 2016 at ` 80 (Face value ` 10 each), when
the market price was ` 70. The vesting period was 2½ years. The maximum exercise period was
1 year. All the options were exercised by the employees on 30.06.2019.
Show necessary journal entries to record the above transactions in the books of the company [Narrations
required]. 10

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3. A Ltd. has authorized capital of ` 50,00,000 divided into 100000 equity shares of ` 50 each. The company
issued for subscription 50000 shares at a premium of ` 10 each. The entire issue was underwritten as
follows :
X — 30000 shares (firm underwriting – 5000 shares)
Y — 15000 shares (firm underwriting – 2000 shares)
Z — 05000 shares (firm underwriting – 1000 shares)
Out of total issue, 45000 shares including firm underwriting, were subscribed. The following were the
marked forms including firm : X – 15600 shares; Y – 10400 shares and Z – 4000 shares.
Calculate the total liability (in number of shares) of each underwriter considering firm applications as
marked. 10

4. The following figures are available from the Balance Sheet of Blue Chip Ltd. as on 31.03.2020 :
`
240000 equity shares of ` 10 each fully paid up 24,00,000
General Reserve 36,00,000
Securities Premium 12,00,000
14% Debentures 50,00,000
Sundry Creditors 22,00,000
Non-Current Assets (Tangible) 72,00,000
Current Assets 72,00,000
The company intends to buy back 40000 equity shares at a premium of ` 30 per share.
State whether the company can do so and if yes, pass journal entries in the books of the company.
[Narration not required] 10

5. The following balances appeared in the books of Syska Ltd. as on 01.04.2020 :

`
13% Debentures Account 7,00,000
Debenture Redemption Fund Account 6,35,000
Debenture Redemption Fund Investment
(Nominal Value = Cost) 6,35,000
The company sold its investments for ` 7,50,000 and redeemed the debentures at par on 01.04.2020.
Prepare 13% Debentures Account, Debenture Redemption Fund Account and Debenture Redemption
Fund Investment Account in the books of the company. 10
 (3) U(5th Sm.)-Corporate Acct.-H/DSE-5.2A/CBCS

6. The Capital structure of White Ltd. is given below :

`
Equity share capital ( ` 100 each) 18,00,000
12% Pref. Share Capital ( ` 10 each) 9,00,000
10% Debentures 13,00,000
13% Term Loan 24,00,000
Reserves and Surplus 6,00,000
The average profit of the company before payment of interest and income tax is ` 14,00,000. The income
tax rate is 25%.
Calculate the value of equity shares of the company assuming Price-Earning Ratio is 10. 10

7. The Capital and Reserves & Surpluses of ABC Ltd. as on 31.03.2021 was as follows (in `) :
10000 Equity Shares of ` 10 each 1,00,000
1000 10% Preference Shares of ` 100 each 1,00,000
Less Calls in arrear (on 100 shares @ ` 20) 2,000
98,000
400, 8% Preference Shares of ` 100 each. ` 60 called 24,000
Securities Premium 12,000
Capital Redemption Reserve 42,000
Reserve Fund 45,000
Surplus in Statement of Profit & Loss 12,000 1,11,000

On 31.03.2021, investments standing in the books at ` 20,000 were sold for ` 18,000. On the same date
it was resolved to redeem the eligible preference shares at 10% premium by issuing sufficient equity
shares at 20% premium, subject to leaving a balance of ` 10,000 in Reserve Fund.
Give necessary journal entries assuming that all transactions were immediately given effect and payments
were made to the Preference Shareholders. (Narration not required) 10

8. Balance Sheet of G. Ltd. as on 31.03.2021 included the following :

` `
Share Capital :
Equity Share Capital ( ` 10 each fully paid) 3,00,000
10% Pref. Shares Capital 1,00,000
Reserves and Surpluses : 4,00,000
General Reserve 24,000
Capital Redemption Reserve 30,000
Statement of Profit & Loss 26,000
80,000
Trade Payables 30,000

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U(5th Sm.)-Corporate Acct.-H/DSE-5.2A/CBCS (4)
Following information are also available :
Assets include a non-trade investment at ` 15,000
Market Value of other assets is ` 40,000 more than the book value.
Profits before tax for last three years were : 2018-2019 : ` 58,000, 2019-2020 : ` 64,000 and
2020-2021 : ` 75,000
Fair Return on Capital Employed in this type of business is estimated at 10%.
In year 2018-2019, there was an accidental loss of ` 6,600.
Profits of 2019-2020 and 2020-2021 include ` 2,000 and ` 1,600 as income from non-trade investments.
You are required to calculate the value of Goodwill of G. Ltd. based on above using 4 years purchase
of super profit (assume applicable rate of income tax to be 20%) 10

Group - B
Answer any two questions.
9. Televista Ltd. invited applications for 20000 Equity Shares of ` 10 each at a premium of ` 2 per share,
payable ` 3 per share on application, ` 5 per share on allotment (including premium) and the balance on
first and final call. Applications for 27000 shares were received. It was decided :
(i) to refuse allotment to the applicants for 3000 shares;
(ii) to allot in full to the applicants for 4000 shares;
(iii) to allot the balance of the available shares pro-rata among the other applicants; and
(iv) to utilise excess application money in part payment of allotment money.
Mr. X holding 250 shares, to whom shares were allotted on pro-rata basis, failed to pay the amount due
on allotment and call. Mr. Y holding 150 shares to whom full allotment was made, also failed to pay
allotment and call money. These shares were forfeited after call. 150 forfeited shares of Mr. X and
100 forfeited shares of Mr. Y were reissued at ` 9 per share as fully paid up to Mr. Z.
Show the necessary journal entries including cash transactions in the books of Televista Ltd. [Narrations
not required] 20

10. Following are the items appearing in the Balance Sheet of X Ltd. as on 31.03.2020 :
`.
Share Capital :
6000, 10% Preference shares of ` 100 each 6,00,000
120000, Equity shares of ` 10 each 12,00,000
Reserve & Surplus :
General Reserve 5,00,000
Balance in Statement of Profit & Loss (8,50,000)
Non-current Liabilities
2000, 6% Debentures of ` 100 each 2,00,000
Current Liabilities
Trade Payables 6,50,000
23,00,000
 (5) U(5th Sm.)-Corporate Acct.-H/DSE-5.2A/CBCS

As se ts
Non-current Assets
Property, Plant and Equipment 13,80,000
Current Assets
Inventories 3,90,000
Trade Receivables 2,10,000
Cash and Cash equipments 3,20,000
23,00,000
A scheme of reconstruction was adopted with a reduction of capital which was approved by the tribunal
on the following terms :
(a) Equity shares to be converted into same number of equity shares of such face value as to reduce
the paid up equity share capital by 30%.
(b) Preference shares to be converted into same number of preference shares of ` 60 each, fully paid up.
(c) Balance of General Reserve to be utilised in full.
(d) Debentures to be converted into such number of 8% Debentures of ` 50 each as to generate the
same amount of interest as before.
(e) Property, Plant and equipment and inventories are to be reduced by ` 5,52,000 and ` 38,000
respectively.
(f) Arrears of preference dividend to be waived in full. The deficit balance in the statements of profit
and loss to be written off in full.
(g) The following are to be given effect :
(i) Unrecorded debtors ` 3,34,000
(ii) Unrecorded creditors ` 80,000 to be paid in full
(iii) Reconstruction expenses ` 11,500 to be paid.
Pass necessary journal entries (without narration) and the resultant Balance sheet after the capital
reduction. 20

11. BT Ltd. is absorbed by the CT Ltd. on 01.04.2021, on which date the assets and liabilities of BT Ltd.
were as follows :
Amount (`)
I. Equity and Liability :
1. Shareholder’s Fund :
(a) Equity Share Capital ( ` 10 each fully paid) 80,000
(b) Reserves and Surplus :
General Reserve 40,000
Surplus Balance in Statement of Profit and Loss 32,000
72,000
2. Non-current Liabilities : 10% Debentures (100 each) 50,000
3. Current Liabilities : Trade Payable 13,000
Total 2,15,000

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U(5th Sm.)-Corporate Acct.-H/DSE-5.2A/CBCS (6)

Amount (`)
II. Assets :
1. Non-current Assets :
(a) Property, Plant and Equipment :
Tangible : Land and Building 1,20,000
Plant and Machinery 36,000
2. Current Assets :
Inventory 40,500
Trade Receivables 18,000
Less : Provision for doubtful debt 900
17,100
Cash and Bank 1,400
Total 2,15,000
The consideration payable by CT Ltd. was :
(a) A cash payment of ` 105 for every debenture in BT Ltd.
(b) Exchange of 3 shares in CT Ltd. of ` 5 each (to be issued at ` 6 each) for every share in BT Ltd.
(c) A further payment in cash at ` 4 for each share in BT Ltd.
(d) The expenses of liquidation ` 3,000 were paid by the BT Ltd.
Calculate the purchase consideration, and show Realisation A/c, CT Ltd. A/c, Equity Share Holders A/c
and Bank A/c in the books of BT Ltd to close its books. 20

12. The following is the Trial Balance of Y. Ltd. as on 31.03.2020 :

Dr. ( ` ) Cr. ( ` )
Stock (01.04.2019) 1,60,000 —
Purchase and Sales 5,00,000 8,00,000
Purchase returns — 10,000
Carriage Inward 2,100 —
Wages 50,000 —
Salaries 20,000 —
Discount Received — 8,000
Furniture and Fittings 40,000 —
Rent 10,000 —
Sundry Expenses 16,500 —
Balance in Profit & Loss Statement (01.04.2019) — 50,000
Paid up Capital — 2,00,000
Interim dividend 16,000 —
Dividend distribution tax on interim dividend 3,290 —
Debtors and Creditors 52,400 31,000
 (7) U(5th Sm.)-Corporate Acct.-H/DSE-5.2A/CBCS

Dr. (`) Cr. (`)

Plant and Machinery 2,46,000 —
General Reserve — 20,000
Patents 8,000 —
Bills Receivable and Payables 2,710 8,000
11,27,000 11,27,000

Prepare a statement of Profit and Loss for the year ended on 31.03.2020 and a Balance Sheet as at
that date as per schedule III of Companies Act. 2013 taking into consideration the following
adjustments :
(a) Stock at on 31.03.2020 was ` 1,96,000
(b) Depreciate Plant and Machinery @ 15%, Furniture and Fittings @ 10%
(c) Make a provision for doubtful debts @ 10%
(d) Provision for tax is to be made @ 40% and the rate of Dividend distribution tax is 20.56%
(e) Patents have a life of 5 years
(f) The directors proposed a dividend @ 10% for the year ended 31.03.2020 excluding Interim dividend
and decided to transfer ` 15,000 to General Reserve. 20