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ANIL SURENDRA MODI scHooL oF coMnmRCE
AcademicYear:2017-2018

Program B.Com. (Hons.) Year: II Semester: III

Subject:Financial Accounting-Ill '` Batch: 2016-2019 .-

Time: 1.00 pin to 3.00 pin (2Hrs)

Date : 18/11/2017 -
No.of pages: 6fty _
Marks: 60
FINAL EXAMINATION

N.B.:-
1. Question no.1 and 2 are compulsory.
2. Attempt Any Three from the rest,
3. Figures to the right indicate full marks.

QIA. Answer the following by choosing the correct a[temative answer:

(5. marks)
Which of the following statement is false?
a) The forfeited shares should not be issued at a premiuin.
b) At t:he time of forfeiture of shares, securities premium should not be debited with
the amount of premium already received.
Public Ltd. Company generally issues shares for cash.
Securities -Prengium account cannot be utilized to redeem preference shares.

Ltd allotted 10,000 shares to the applicants of 14,000 shares on pro rata basis.
The amount payable on application was Rs. 2. F applied for 420 shares. The number
of shares allotted and the amount carried forward for adjustment against allotment
money due from F = ?
a) 60 shares, Rs. 120
b) 340 shares, Rs, 160
c) 320 shares, Rs. 200
d) 300 shares, Rs. 240

iii. According to section 52 of the Companies Act, 2013, the amount in the Securities
Premium A/c cannot be used for the purpose of
a) Issue offully paid bonus shares
b) Writing off losses of the company
c) For purchase of own securities
d) Writing off commission or discount on issue of shares

1/fr
 •EI

iv. I When debentures are redeemable at different dates, the total amount of discount
on issueof debentures should be written off
a) Every year by applying the sum of the year's digit method
b) Every year by applying the straight line method
c) To profit and loss account in full in the year of final or last redemption
d) To profit and loss account in full in the year of first redemption.

v. Profit on cancellation of own debentures is transferred to:

a) Capital Redemption Reserve
b) Capital Reserve
c) Securities Premium
d) General Reserve
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QIB. (5 marks)
Zee Ltd. issued 80,000 equity shares of Rs.10 each, payable as under: On
application Rs. 3
0n allotment Rs.4
0n first call Rs.2
0n final call Re.1
The applications received for 1,20,000 shares were dealt with as under:
• Applicants of 20,000 shares were allotted in full.
• Applicants of 80,000 shares were allotted 60,000 shares pro-rata.
• Applications for 20,000 shares were rejected.
i. Amount received on application is

(a) Rs.2,40,000 (b) Rs.3,60,000 (c) Rs.5,60,000 (d) Rs.8,00,000

ii. Total excess money received as compared to the number of shares allotted =?
(a) Rs.3,00,000 (b) Rs.2,40,000 (c) Rs.3,60,000 (d) Rs,1,20,000
iii. Amount to be refunded =?
(a) Nil (b)Rs.60,000 (c)Rs.1,20,000 (d) Rs.1,80,000
iv. Amount of excess application money available for adjustment against
allotment money = ?
(a) Nil (b) Rs.60,000 (c) Rs.1,20,000 (d) Rs.1,80,000
V. Amount of excess application money available for adjustment against call
money = ?

(a) Nil (b) Rs.60,000 (c) Rs.1,20,000 (d) Rs.1,80,000

2;+
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Q2I (20 marks)
Given is the Trial Balance of Marathon Limited as on 31st March, 2017. You are
required to prepare the Profit and loss Account for the year ended 31st March 2017 and
Balance Sheet on 31st March, 2017 as per the Companies Act, 2013,

Pall:iculars Dr, Cr,

Authorised Share capital divided into 8,000,

60/o preference shares of Rs.100 each and I

20,000 equity shares of Rs.100 each 28,00,000

Subscribed Capital
5,000 60,Jo preference shares of Rs,100 each 5,00,000
E= Eq uity Share Capital (fully paid) 8,00,000

Capital Reserve 5,000

Purchases -Coco, Tea, Coffee 58;800

- Bakery products 36,200

Wages and Salary 15,300

Rent, Rates and Taxes 8,900

Laundry 750

Sales -Coco, Tea and coffee 82'000

- Bakery products 44,000

Coal and Firewood 3,290

Carriage 810

Sundry Expenses ' 5,840

EE
Advertising 8,360

Repair 4,250

Rent of Rooms 48,000

Receipt from Billiards 5,700

Mi scellaneous Receipts 2,800

Discount Received 3,300

Transfer Fee 7oo

10,00,000
Freehold Land and Building (At Cost)

Accumulated Depreciation on Land & Building 1,50,000

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Furniture and Fittings (At Cost) 1,00,000

Accumulated Depreciation on Furniture and Fittings 13,700

Stock on hand, 1st April, 2016

Coco, Tea, Coffee 12'800

Bakery products 5,260

Cash in Hand 2,200

Cash with Bank 76,380

Preliminary and Formation Expenses 8,000

2000, 8% debentures of Rs.100 each 2,00,000

Profit and Loss Account 41,500 +

Sundry Creditors 42,000

Sundry Debtors 19,260

Investment 2,72,300

Goodwill at Cost 5,00,000

General Reserve 2,00,000

21,38,70021,38,700

Additional Information:
Wages and Salaries outstanding 4,280

Stock as on 31st march, 2017

• Coco, Tea, Coffee 22,500

• Bakery products 16,400

Provide 5% depreciation on Furniture and Fittings and 20/o on Land and Building on
WDV Basis

Debtors include an amount of Rs. 5,000 outstanding for a period of more than 6
months.

The equity capital on lst April, 2016 stood at Rs. 7, 20,000, that is 6,000 shares fully
paid and 2,000 shares of Rs. 60 paid. The directors made a call of Rs. 40 per share on
lst October, 2016. A shareholder could not pay the call on 100 shares and his shares
were then forfeited and reissued at ` 90 per share as fully paid. The Directors propose a
dividend of 8% on equity shares, transferring any amount that may be required from
general reserve, Ignore taxation.

4/7-
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Q3. X Ltd. Invited applications for 11,000 shares of Rs.10 each, issued at 20%
premium payable as :
Application Rs. 3 (including Re.1 premium)
Allotment Rs. 4 (including Re.1 premium)
First call Rs. 3
Second and Final call Rs. 2
Applications were received for 24,000 shares
Category I :-One fourth of the shares applied for allotted 2000 shares
Category 11 :-Two fourth of the shares applied for allotted 9000 share
Category Ill :- Remaining applications were rejected

Excess amount received is to be adjusted towards allotment and any amount beyond
that shall be refunded.

E= Mr. Remo, holding 300'shares out of category 11 failed to pay allotment and two calls
and his shares were forfeited and re-issued @ Rs.11 fully paid up.
Pass journal entries in the books of x Ltd. (10 marks)

Q4. Arjun, Nakul and Bhim are partners of Bright Brothers. They share profits and
losses in the ratio of 5:4:3. On January 1, 2006, their balance sheet was as under:

Liabilities Rsl Assets Rs-

Capital Accounts: Building 75,000
Arjun 75,000 plant andMachinery 60,000

Nakul 60,000 Delivery Van 18,000

Bhim 50,000 1,85,000 Investments 26,000
Nakul's loan 30,000 Stock 21,000
Creditors 20,000 Sundry Debtors 30,000
Bill payable 10,000 Cash 15,000
L 2,45,000 2,45,000
On the above date, a private company was incorporated to take over the above
firm on the basis of the following terms and conditions:
a) All assets (except delivery van) and all liabilities (excluding Naku]''s loan) were
taken over by the company at their book values except the following:
Buildings: Rs. 98,000; Machinery: Rs. 56,000
b) Goodwill of the firm is to be valued at Rs. 42,000.
c) Delivery van was taken over by Nakul at an agreed valuation of Rs. 15,000 as
part payment of his loan and for the balance, he is given loo/o preference shares
of Rs. 10 each of the company out of the purchase consideration received from
the company.

5(+
 d) The balance purchase consideration was discharged by the new company by
issuing fully paid up Equity shares of Rs. 1 each.

Give the necessary ledger accounts in the books of the firm. (10 marks)

Q5. A Z Ltd. took over the assets of Rs. 6,00,000 and liabilities of Rs. 80,000 of C Ltd.
for an agreed purchase consideration of Rs. 5,40,000 to be satisfied by the issue of
10%
Debentures of Rs. 1,000 each.
Required : Show the necessary journal entries in the books of Z Ltd, assuming that-
Case (a) Such Debentures are issued at par;
Case (b) Such Debentures are issued at 20% premium; and
Case (c) Such Debentures are issued at 10% discount.
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Q5 a Moon purchased a machine on Hire Purchase System. The total cost price of
the machine was Rs. 15,00,000 payable 20% down and four annual installments of
Rs. 4,20,000, Rs. 3,90,000, Rs. 3,60,000 and Rs. 3,30,000 at the end of the lst, year
2nd year, 3rd year and 4th year respectively. Calculate the interest included in each
year's installment assuming that the sales were made at the beginning of the year.
(5 X 2 = 10 marks)

6`7
/ Q6. Following is the Balance Sheet of M/s Competent Limited as on 31st March, 2015:

Liabilities Rsl Assets Rs,

Equity Shares of Rs.10 Each 12,50,000 Fixed Assets 46,50,000
fully paid
Revenue reserve 15,00,000 Current Assets 30,00,000
Securities Premium 2,50,000
Profit & Loss Account 1,25,000
Secured Loans:
12% Debentures 18,75,000
Unsecured Loans 10,00,000
Current Liabilities 16,50,000
76,50,000 76,50,000
\-, The company wants to buy back 25,000 equity shares of Rs. 10 each, on lst April, 2015
at Rs. 20 per share. Buy back of shares is duly authorized by its articles and necessary
resolution passed by the company towards this. The payment for buy back of shares
will be made by the company out of sufficient bank balance available as part of Current
Assets.
Comment with your calculations, whether buy back of shares by company is within the
provisions of the companies Act. If yes, pass necessary journal entries towards buy
back of shares. (10 marks)

Q.7 Answer any two of the following: (2 X 5 marks = 10 marks)

1. Distinguish between Hire Purchase & Installment System

2. Explain the concept of Green Shoe Option.

3. Explain the salient features of Private Limited Company,