BCom SY BCom Sem 4 BCom Sem 4 (2019 2020) Oct 2020 ATKT FINANCIAL ACCOUNT Question Paper - Mumbai University | munotes

Questions asked in this paper

1. Q1 State True or False. (Any 10) 10 marks
   • 1. Convertible debentures are those that can be converted to cash at any time
   • 2. Interest on Debenture Redemption Sinking Fund Investments is transferred to profit and loss account
   • 3. Preliminary expenses must be apportioned on time basis of Pre incorporation and post incorporation
   • 4. Profit after incorporation is capital profits
   • 5. Capital redemption reserve account can be utilised for writing of miscellaneous expenditure and losses
   • 6. Debenture holders are not the members of the company
   • 7. Dividend equalisation reserve can be used as divisible profits while redeeming Preference shares
   • 8. Debenture Redemption reserve is to be created even if debentures are redeemed through conversion
   • 9. Depreciation is allocated on the basis of time ratio
   • 10. Debentures can be redeemed by payments in annual instalments
   • 11. On redemption of preference shares out of profits, a sum equal to the nominal value of shares redeemed should be transferred from Profit and Loss account to the General Reserve
   • 12. Debenture can be issued at a discount and redeemed at a premium
2. Q1 B. Match the following. (Any 10) Unsecured Debentures A show under Current Liabilities in Balance Loss on sale of Cumulative Sinking Fund Debenture Suspense Account Debentures issued as Collateral Securit credited to Profit and Loss Account 4 Capital Redemption Reserve D be used for issue of fully paid bonus divided in respect of respective profits Rent for computing pre-incorporation F Naked Debentures 7 Balance of Debenture Redemption Reserve | G Section 71(4) of the Companies Act, 2013 8 Unpaid balance in Preference Shareholders | H cannot be used for meeting premium Account payable on redemption of Preference id i Share transfer fees may not be fully paid Income tax for computing pre- K debited to Sinking Fund Account i2 | Premium received on new shares issued L divided in the ratio of time before redemption of Preference Shares The following is the balance sheet of a company on 31st March 100000 Equity shares of rupees 10 Cash at Bank $0000 each fully paid 1000000 shares of rupees 10 each fully paid 200000 10,000 12% Debentures of rupees Profit and Loss Account 25000 The company decides to redeem the Preference shares for this purpose and made a fresh issue of Equity shares of rupees 10 each to the extent of rupees 125000. All the shares were duly taken up and paid for by the existing shareholders. Give the journal entries and prepare the balance sheet after Redemption of Preference shares. Company can arrange for bank loan to the extent required. 15 marks 10 marks
3. Q2 The summary Balance Sheet of ABC Limited as on 31st March 2018 is given below 5000 Equity shares of rupees 100 - Investments 100000 each 500000 | Cash at Bank 5000 shares of rupees 10 each 100000 Issued and paid up capital 2500 Equity share of rupees 100 —5 each fully paid 9% Redeemable Preference shares of Rs 10 each fully paid and On Ist April 2018 the company the Preference shares at a premium of Rs 2 per share
   • 2.Realised investments at 80% of the cost
   • 3.Issued at a premium of Rs 40 per share, such number of Equity shares for the purpose of aforesaid redemption as to ensure that after the compliance with the requirements of the Companies Act, 2013 with regard to Redemption of preference shares, the credit balance in Profit and Loss A/c would be Rs 12500 as Bonus, Equity share at par at the rate of one share for every 20 shares held on 31st March 2018 out of the said balance in Capital Redemption Reserve account Show necessary journal entries to record the above transactions. Working note should form part of the 1st March 2018 Limited had to redeem 250000 15% Redeemable Preference shares of Rs ach at a premium of Rs 10 per share and 20000, 16% non convertible debentures of Rs 100 each at a On 31st March 2018, the companies reserves and surplus position was Rs Balance in Profit and loss account 3750000 During the year ended 31st March 2018 the company earned Profit after tax of Rs45 lacs of which Rs5 lacs are capital profits and the rest were revenue profits. Directors of JRD Limited decided to 1)pay preference dividend out of revenue profits 2) redeem the debentures as per the terms 3) redeem the preference shares as per the terms 4) use security premium money for providing for premium on Redemption 5) transfer the necessary amount to Capital redemption reserve. Pass journal entries giving effect the five decisions of the directors. Give working notes. 15 marks
4. Q3 Following is the Balance Sheet of Lupin Limited as on 31st March 2018 15000 equity shares of rupees 10 Land and Building 600000 each 150000 | Plant and Machinery 600000 7500 9% preference shares of rupees Investments 300000 Profit and Loss account 600000 | Debtors 110000 On the above date, Preference are redeemable at premium of 10%. For this purpose, company sold off investment for Rs 325000. Subsequently, it issued 20000 Equity shares of Rs 10 each at a premium of 10%. At the end, the company redeemed all the preference shares as decided. The company also redeemed their 10% debentures at par. Pass necessary journal entries in the books of the company to record the above transactions
5. Q4 Yankee Limited was incorporated to take over the running business of Frankee Limited with effect from 1st April 2018. The company was incorporated on Ist August 2018 and it commenced its business on Ist October 2018. The following information was available from the books of accounts which were closed on 31st March 2019
   • 1.Sales were Rs500000 p.m. during pre-incorporation period while the total sales for the year wer lacs. The sales arose evenly throughout the concerned period
   • 2.Office rent was Rs84000 per annum. It became Rs108000 per annum from the date of commencement
   • 3.Travelling expenses included Rs7200 incurred by the office staff and balance by the sales staff
   • 4.Depreciation included Rs6000 for the asset acquired in post incorporated period included partner’s salaries Rs 60,000 while the remaining salary was for the office staff Prepare Statement of profit and loss for the year ended 31st March 2019 in the columnar form showing profit and loss during the pre-incorporation and post incorporation period separately. 15 marks
6. Q4 Amar Limited was incorporated on Ist August 2018. This company agreed to take over business of M/s Akbar & Anthony Ltd. as Going Concern effective from 1st April 2018. The agreement also provided that vendors are entitled to 60% of profit or loss if any for period upto Ist August 2018. The rofit and loss account for the year ended 31st March 2019 is: To stock 15000 | By Sales 150000} To materials consumed 60000 | By Stocks 21000 To factory expenses 21000 To gross profit 000 To salaries | By Gross Profit 60000 To rent 4500 | By Profit on sale of Investment 10000 To office expenses 3000 \ To sales commission 7500 \ To bad debts 2500 \ To director fees 4000 \ To debentures interest To interest to vendor 3000 To net profit 17500
   • 1)Monthly sales for October 2018 to March 2019 is 150% of monthly sales for April 2018 to September
   • 2)Bad debt is in respect of sales effected two years ago
   • 3)Investment was sold on Ist November 2018
   • 4)Consideration to vendors was paid on Ist October 2018
   • 5)Rent was increased from Rs250 per month to 500 per month effective from 1st October 2018 Prepare Statement of Profit and Loss
7. Q5 Following is a summary balance sheet of Atma Limited as on 3 lst March 2018 shares of Rs 100 each fully paid up 800000 | Investments 400000 200000 Equity shares of Rs10 each 2000000 decided to redeem both classes of preference shares at a premium of 10%. For this purpose the Made final call of Rs20 per share on 7% Redeemable Preference.Shares, which was paid by all the 36000 equity shares of Rs10 each at a premium of Rs2 per share. This issue was fully subscribed and the entire amount duly received
   • 3.Sold investments at a profit of 10% bonus shares to the equity shareholders in the ratio of one bonus share for every 2 shares held All the payments made except to the shareholders holding 100, 8% preference shares could not be traced You are required to give journal entries to record the above transactions in the books of the company
8. Q5 Madhur Limited issued on Ist. April 2012, 2600, 7% preference shares of Rs100 each at par redeemable on or after 31st March 2018 in whole or in part. The company later issued 8% debentures of face value of Rs100000 on Ist April 2012 redeemable on after 31-3-2019 also in whole or in part On 31st March 2018 the Preferences of the face value of Rs180000 were redeemed out of profits On Ist March 2019 the company for the purpose of redemption of preference shares issued 5000 equity shares of rupees 10 each at a premium of 2%. All the shares were fully subscribed for On 31st March 2019 it redeemed the remaining preference shares at par. The corhpany redeemed all the debentures (out of profits) also the same date at a premium of 5% There was sufficient balance in general reserve account and bank account as on 31st March 2018 and 31st March 2019. Ignore preference dividend and debenture interest Pass journal entries in the books of the company for the year ended 31st March 2018 and 31st March 2019 for redemption of preference shares and debentures in the view of provisions of Companies Act,
9. Q6 A. Distinguish between Calls in arrears and Calls in advance. 10 marks
10. Q6 B. Distinguish between Preference Share Capital and Equity Share Capital. 10 marks
11. Q6 Short Notes (Any 4) 20 marks
    • a. Debentures
    • b. Subsidiary Company
    • d. Discount on issue of debentures

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