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 MATHUR SIR – 8777249775

GENERAL
C. U. – 2019
Paper: DSE-5.2A
Full Marks: 80
Group – A

1. The directors of KPL Industries Ltd. have invited applications for 72,000 Equity Shares of
Rs.10 each to be issued at 20% premium. The money payable on shares is as follows:
01.05.18: On application Rs.2
01.06.18: On allotment Rs.5 (including Premium of 2)
01.01.19: First and Final call Rs.5
Application were received for 90,000 shares and allotment was made pro-rata to the
applicants. All shareholders are paid their dues within the due time except Mr. Ranjit, to
whom 3,600 shares were allotted, failed to pay the allotment and call money. His shares are
forfeited fulfilling the statutory provisions. Subsequently these shares are re-issued to
Animesh as fully paid shares at Rs.8 per share on 01.03.19.
Show the necessary journal entries (including cash transactions). (10)
[Ans. Share Forfeited =9,000/ 7,200; Capital Reserve = 1,800]

2. Zenith Ltd., issued 3,00,000 share of Rs.10 each at a premium of Rs.2. The entire issue
was underwritten by X, Y and Z in the ratio of 3: 2:1. Their firm underwriting was as follows:
X: 35,000 shares, Y 20,000 shares, Z: 22,500 shares.
The total subscriptions, excluding firm underwriting, including marked applications were for
1,60,000 shares. Marked applications received were as follows:
X: 45,000, Shares Y 22,500 shares, Z: 17,500 Shares.
The underwriting contract provided that credit for unmarked applications to be given to the
underwriters in proportion to the shares underwritten and benefit of firm underwriting is to
be given to all underwriters.
You are required to compute the underwriter's liability in number of shares. (10)
[Ans. Total Liability of Underwriting X = 69,750; Y = 46,667; Z = 29,583 Unmarked
Application = 1,52,500; Apportionment X = 76,250; Y = 50,833; Z = 25,417]

OR,

1
 MATHUR SIR – 8777249775

(a)Following is the extracts of Balance sheet of BPA Limited as on 31.03.19:

Rs.
Share capital:
12,000, 12% preference Shares of Rs.10 each fully paid 1,20,000
80,000 Equity Shares of Rs 10 each fully paid 8,00,000
Reserve and Surplus:
Capital Redemption Reserve 2,50,000
Securities Premium 1,00,000
Revaluation Reserve 1,50,000
General Reserve 1,00,000
Profit and loss balance (Cr.) 3,00,000
Company has decided in its General Meeting to capitalize its reserve by issue of 1 fully paid
bonus share for every 2 equity shares held after fulfilling the legal formalities. Pass the
journal entries to give the effect of the above decision.

(b) On 01.04.17 Zed Pharmaceuticals Ltd had granted 2,000 shares to the employees under
stock option scheme at Rs. 80 (Face value Rs. 10; Market value Rs.120). The company
allowed 2 years for vesting the option and 1 year maximum exercise period. Employees
exercised all the options on 31.12.19. Show necessary journal entries for the above
transactions. (4+6)
[Ans. (a) CRR = 2,50,000; S. Premium = 1,00,000; G. Reserve = 50,000; Bonus Dividend =
4,00,000; (b) ESOO = 40,000; ESOE = 40,000; Equity shares Capital = 20,000; S. Premium =
2,20,000]

3. The balance sheet of Gyan Ltd. As on 31.06.2019 is as follows:

Equity and liabilities Amount (Rs.)
Shareholders’ fund
(a) Share Capital
Equity Share Capital of Rs.10 each fully paid 2,00,000
10% Preference Share Capital of Rs.100 each fully paid 3,00,000
(b) Reserve and Surplus
General Reserve 1,20,000
Profit and Loss Balance 4,00,000
Current Liabilities
Trade Payable 80,000
TOTAL 11,00,000
Assets Amount (Rs.)

2
 MATHUR SIR – 8777249775

Non-Current Assets
(a) Property Plant and equipment - tangible 5,00,000
(b) Non-current investment
Current Assets 3,00,000
Cash and Cash equivalent 3,00,000
TOTAL 11,00,000
In the board meeting it was decided
(i) To sell investment at a profit of Rs.10,000.
(ii) To redeem the Preference Shares at 10% premium.
(iii) Utilize the reserve and profit & loss balance after maintaining balance in Profit and Loss
Account Rs. 3,00,000 for redemption.
(iv) To issue minimum number of equity shares of Rs.10 each for the purpose of
redemption.
You are required to pass necessary journal entries to record the above transactions. (10)
[Ans. Amount Payable on redemption = 3,30,000; Amount required for fresh issue =
1,00,000; No. of equity shares to be issued = 10,000; CRR = 2,00,000; P/L = 80,000; G.
Reserve = 1,20,000] OR,
The balance sheet of Pragyan Ltd. As on 31.03.19 is as follows:
Equity and liabilities Amount (Rs.)
Shareholders’ fund:
(a) Share Capital
2,50,000 equity Share Capital of Rs.10 each fully paid 25,00,000
2,000 10% Preference Share Capital of Rs.100 each fully paid 2,00,000
(b) Reserve and Surplus
Capital reserve
Securities premium 10,00,000
General Reserve 6,00,000
Profit and Loss Balance 30,00,000
Current liabilities: 4,00,000
Trade Payable 15,00,000
TOTAL 92,00,000
Assets Amount (Rs.)
Non-Current Assets
(a) Property Plant and equipment - tangible 47,00,000
(b) Non-current investment
Current Assets 30,00,000
Cash and Cash equivalent 15,00,000
TOTAL 92,00,000
The company passed a resolution
(a) To buy back 20% of its equity capital @ Rs.50 per share.
(b) To sell all of its investment for Rs. 29,00,000.

3
 MATHUR SIR – 8777249775

You are required to pass the necessary journal entries and prepare the Balance Sheet. (6+4)
[Ans. Loss on sale on Investment = 1,00,000; Premium on Buy Back = 20,00,000; CRR =
5,00,000; Balance Sheet = 66,00,000]

4. The following balances appeared in the books of Birla Ltd. as on 31.03.2018:

13% Debentures account Rs. 7,00,000
Debenture Redemption Fund Account Rs. 5,00,000
13% Debenture redemption Fund Investment Account (Nominal
= Cost) Rs. 5,00,000
The annual contribution to the Debenture Redemption Fund was Rs. 70,000. The Company
sold its investments for Rs. 7,00,000 and redeemed the debentures on 31.03.2019.
Prepare 13% Debenture Account, Debenture Redemption Fund Account and Debenture
redemption Fund Investment Account up to 31.03.2019. (3+4+3)
[Ans. Balance b/f = 7,00,000; Intt. On Deb. Redmp. Fund = 65,000; Surplus = 70,000; Bank
(Sale) = 7,00,000; Profit on sale = 2,00,000]

5. Following information is extracted from the records of XYZ Ltd. Calculate the value of
goodwill as on 31.03.2019:
• Equity Share Capital (Rs.10) Rs. 8,00,000
• 11% Pref. Shares Capital Rs. 2,00,000
• Reserve and Surplus Rs. 90,000
• 12% Debentures Rs. 1,00,000
• Creditors Rs. 70,000
• Non-trade investment Rs. 80,000
• Profits for last three years before tax were: 2016-17: Rs. 1,60,000; 2017-18: Rs.
2,20,000 and 2018-19: Rs. 2,40,000 respectively.
• Non-trade income of Rs. 6,400 (before tax) was included on an average for each of
these years.
• Tax rate 40%
• Fair Return on Capital Employed in this type of business is estimated at 12%
• Goodwill is to be valued on the basis of 4 years purchase of Super Profit. (Take
simple average profit.)
[Ans. Opening Capital Employed = 11,10,000; Normal Profit = 1,33,200Opening Profit
Before Tax = 1,27,360; Super Profit and Valuation of Goodwill = - 5,840]
OR,
The following particulars are available in relation to Chamling Ltd:
• Equity Share Capital: 5,000 Equity Shares of Rs.20 each.
• Preference Share Capital: 1,000. 8% Preference Shares of Rs. 100 each
• Total assets (Market value Rs. 3,00,000) Rs. 2,50,000.
• Current Liabilities Rs. 18,000
Average trading Profit after tax Rs. 40,000

4
 MATHUR SIR – 8777249775

• Amount transfer to General Reserve 15%

• Normal rate of return on equity shareholders in market 10%
Calculate:
(a) Intrinsic value per equity share
(b) Yield value of equity share
(c) Fair value of share. (4+4+2)
[Ans. Net Assets available to Equity Share Capital = 1,82,000; Value per Shares = 36.40;
Earning available to Equity shareholders = 26,000; Expected rate of return = 26%; Value
per Shares = 52; (Fair Value Method) = 44.20]
GROUP – B
6. Following is the Trial Balance of JK Limited as on 31.03.2019.
Particulars Dr.(Rs.) Particulars Cr. (Rs.)
Machinery 2,00,000 Equity share capital (Rs.10 2,00,000
Furniture 1,00,000 each) 50,000
Land 3,00,000 Creditors 8,70,000
12% investment (non-current) 1,30,000 Sales 25,000
(Purchased 01.04.18 Nominal Bills payable 10,400
value Rs.1,20,00.) Interest received 75,000
Bills receivable 10,000 General reserve 87,600
Debtors 30,000 Surplus balance (01.04.18)
Purchases 5,00,000 10% debentures 1,00,000
Stock (01.04.18) 40,000 Bank overdraft 15,000
Salaries 35,000 Provision for depreciation:
Rent 15,000 On machinery40,000 60,000
General administration 1,00,000 On furniture20,000 1,500
expenses 2,000 Bad debt recovery
Cash 20,000
Bank 10,000
Debenture interest 2,500
Bad debt
14,94,500 14,94,500
You are required to prepare the Statement of Profit and Loss for the year ended 31.03.19
and the Balance Sheet as on that date after considering the following in the books of JK Ltd.
(a) Unsold stock on 31.03.19 at cost Rs.20,000.
(b) Depreciation to be charged on Machinery @ 10% and on Furniture @ 5% p.a. on
diminishing balance method.
(c) Rate of Income tax is 30% (ignore surcharge and cess).
(d) 10% profit transferred to General Reserve.
(e) Salaries outstanding Rs.1,500. Ignore corporate dividend tax.
(10+5)

5
 MATHUR SIR – 8777249775

[Ans. Total Revenue = 8,85,900; Profit Before Tax = 1,81,900; Earing Per Shares = 6.37;
Reserve and Surplus = 2,89,930; Balance Sheet = 7,21,000]

7. (a) What do you understand by Purchase Consideration as per AS-14?

(5)
(b) Sun Ltd. agreed to take over Moon Ltd. on Apr. 1, 2019. The terms and conditions of
take over were as follows:
• Sun Ltd. issued 56,000 equity shares of Rs. 100 each at a premium of Rs. 15 per share to
the equity shareholders of Moon Ltd;
•Cash payment of Rs. 39,000 was made to equity shareholders of Moon Ltd;
• 24,000 fully paid preference shares of Rs. 50 each issued at par to discharge the
preference shareholders of Moon Ltd;
• The 8% Debentures of Moon Ltd. (Rs. 78,000) converted into equivalent value of 9%
Debentures in Sun Ltd.;
• The actual cost of liquidation of Moon Ltd. was Rs. 23,000. Liquidation cost is to be
reimbursed by sun Ltd to the extent of Rs. 15,000.
You are required to:
(i) Calculate the amount of purchase consideration as per the provisions of AS-14; and
(ii) Pass Journal Entry relating to discharge of purchase consideration in books of Sun Ltd.
(5 + 5)
[Ans. Purchase Consideration = 76,79,000; S. Premium = 8,40,000]
OR,
Following is the balance sheet of B. Ltd. as on 31.03.2019:
Particulars Note no. Rs.
I. EQUITY AND LIABILITIES
1. Shareholders fund
(a) Share Capital 1 11,00,000
(b) Reserve and surplus:
P/L balance (2,30,000)
2. Non-current liabilities
Long-term borrowing:
Secured Loan 50,000
3. Current liabilities
Trade payable:
Creditors 1,25,000
TOTAL 10,45,000

6
 MATHUR SIR – 8777249775

II. ASSETS
1. Non-current assets
Property, Plant and Equipment
(a) Tangible assets 2 7,00,000
(b) Intangible assets 3 1,95,000
2. Current assets
(a) Inventories 1,35,000
(b) Trade receivables: 90,000
Debtors
(c) Cash and cash equivalents 4 (75,000)
TOTAL 10,45,000
Notes to accounts:
Particulars Rs.
1. Share Capital
3,000, 5% Pref. shares of Rs.100 each 3,00,000
8,000 Equity shares of Rs.100 each 8,00,000
11,00,000
2. Tangible assets
Land and building 4,50,000
Plant and machinery 2,50,000
7,00,000
3. Intangible assets
Goodwill 1,50,000
Patents 45,000
1,95,000
4. Cash and cash equivalents
Bank overdraft 75,000
The Company undertook the following scheme of reconstruction:
(a) Equity Shares were to be reduced to shares of Rs.50 each fully paid up.
(b) Preference Shares were to be converted into 7% Preference Shares of Rs.70 each fully
paid up.
(c) Sundry Creditors agreed to give up 1/5th of their claims provided they were paid off
immediately.
(d) 5,000 Equity Shares of Rs.50 each were to be issued for cash.
(e) Expenses of reconstruction were to be Rs.7,500.
(f) The company decided:
• to write off Goodwill, deficit balance of Statement of Profit and Loss and Patents.
• to write down Plant and Machinery by Rs.45,000 and inventories by Rs.20,000.
• to create a Provision for Doubtful Debts @ 5%.
Show journal entries giving effects to the scheme of reconstruction. (15)
[Ans. Reconstruction = 5,07,500; Capital Reserve = 13,000]
7
 MATHUR SIR – 8777249775

CORPORATE ACCOUNTING
HONOURS
C.U – 2019
Paper: DSE 5.2A
Full Marks: 80
Group – A
1. Sunshine Ltd. issued 50,000 Equity Shares of Rs.10 each at a premium of 20% payable as
Rs.3 on application, Rs.6 on allotment (including premium) and the balance in one call after
3 months from allotment. Applications were received for 80,000
equity shares. Allotment was made pro-rata to the applicants for 75,000 equity shares, the
remaining applications being rejected. Excess money on application (eligible for allotment)
was adjusted with allotment. Sourav, to whom 400 equity shares were allotted, failed to pay
the allotment and call money. Rahul, who applied for 750 equity shares, failed to pay call
money. These shares were subsequently forfeited and all the shares of Sourav and 50%
shares of Rahul were reissued at a discount of 10% to Sachin as fully paid up. Show the
necessary journal entries for forfeiture and reissue only (narrations required) in the books of
the company. (10)
[Ans. Share Forfeited = 650; Capital Reserve = 2,900]

2. Akash Ltd. granted on 1st April, 2016 options for 2,000 shares of Rs.10 each, to its
employees at Rs60 each. The market price on that date was Rs.150 per share.
The vesting period was 3 years and the maximum exercise period was 6 months. Options for
200 shares were lapsed on 14.01.18.
All the options were exercised on 30.09.2019 except for 100 shares. Show the journal
entries in the books of Akash Ltd. (Narration not required.) (10)
[Ans. ESOO = 60,000; ECE = 48,000; P/L = 54,000; ESOO = 1,53,000; S. Premium = 2,38,000;
G. Reserve = 9,000]
OR,
Remo Ltd. issued a, prospectus inviting applications for subscription in 10,00,000 equity
shares of Rs.10 each. The whole issue was fully underwritten by A, B, C and D as:
A - 30%; B - 25% and C - 35%; D - 10%.
(including firm underwriting of A and B)
Applications were received for 8,00,000 shares of which marked applications (excluding
firm) were as follows:
A - 1,80,000; B 2,00,000; C 2,03,000 and D - 1,67,000
Firm applications were A - 60,000 and B - 40,000 shares,
Determine the liability of each underwriter. (10)
[Ans. Firm Treated as Marked: Total Liability A = 70,615; B = 40,000; C = 89,385; D = 0;
Firm Treated as Unmarked: Total Liability A = 1,07,667; B = 29,722; C = 62,611; D = 0]

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 MATHUR SIR – 8777249775

3. The following information is available from the Balance sheet of Everest Co. Ltd. as on
31.03.2019.
Particulars Rs.
(a) Share Capital
Subscribed and fully paid up:
1,20,000 Equity Shares of Rs.10 each. 12,00,000
TOTAL 12,00,000
(b) Reserves and Surplus
(i) General Reserve 18,00,000
(ii) Securities Premium 6,00,000
TOTAL 24,00,000
(c) Total of secured and unsecured loan - Rs.36,00,000
On the above date equity shares are bought back by the company to the extent possible as
per section 68(2) of the Companies Act, 2013, at premium of Rs.40 per share. You are
required to give journal entries to give the effect to buy-back and also show all workings.
(10)
[Ans. Premium on Buy Back = 7,20,000; G. Reserve = 1,80,000; Shareholders A/c =
9,00,000]
OR,
The following balances are extracted from the books of Sun Ltd.:
10,000, 10% Preference Shares of Rs. 10 each, fully paid up; 6,000, 9% Preference Shares of
Rs. 10 each, Rs. 9 paid up; 20,000 Equity Shares of Rs.10 each fully paid up; General Reserve
Rs. 2,20,000; Profit & Loan account Rs. 80,000; Capital Reserve Rs. 20,000; Securities
Premium Rs. 20,000 (Both the categories of Preference shares were issued prior to 2012.)
Preference Shares are to be redeemed at 10% premium. For this purpose 5,000 Equity
Shares of Rs. 10 each are issued at 10% premium. Holders of 500, 10% Preference Shares
are not traceable. Minimum use of free reserve is to be made for the purpose of
redemption of Preference Shares. Pass necessary Journal Entries. (10)
[Ans. S. Premium = 5,000; 10% Pref. Share Capital = 1,00,000; Premium on Redemption =
10,000; CRR = 50,000; Pref. Shareholders = 1,04,500]

4. The following balances as on 31.03.2018 were extracted from the books of P Ltd.:
Particulars Rs.
12% Debentures Account 4,00,000
Debenture sinking fund account (represented by 10% Rs.3,60,000 secured
bonds) 3,00,000
Annual contribution to the Sinking Fund was made on 31st March each year of Rs. 64,000.
On 31st March, 2019 balance at bank was Rs. 1,60,000. On the same date interest on
investment was received. Investments were sold at 105% and the debentures were
redeemed at par. You are required to prepare 12% Debenture account, Debenture Sinking

9
 MATHUR SIR – 8777249775

Fund Account and Debenture Sinking Fund Investment Account for the year ended
31.03.2019. (10)
[Ans. Intt. On Deb. Sinking Fund investment A/c = 36,000; P/L = 64,000; Deb. Sinking Fund
Investment A/c = 78,000; Deb. Redm. A/c = 4,00,000]

5. From the following particulars, calculate the value of an equity share under Earnings
Method and Dividend Yield Method.
Particulars Rs.
5,000 Equity Share of Rs.100 each fully paid up 5,00,000
1,000, 8% Pref. Shares of Rs.100 each fully paid up 1,00,000
10% Debentures 3,00,000
EBDIT 3,00,000
Depreciation 50,000
Income Tax Rate 30%
Standard Price Earning ratio is 8 and dividend yield is 15%. During the last three years the
company paid equity dividend at 20%, 17% and 20% respectively. (10)
[Ans. EAES = 1,46,000; EPS = 29.0; earning Method (Value Per Shares) = 233.6; Dividend
Yield Method (Value Per Shares) = 126.67]
OR,
From the following information, calculate the value of goodwill as on 31.12.2018:
Particulars Rs.
Equity Share Capital (Rs.10) 6,00,000
Preference Share Capital 1,00,000
Reserve and Surplus 90,000
10% Debentures 90,000
Depreciation Fund 50,000
Creditors 50,000
Total assets include preliminary expenses Rs. 20,000
Market value of assets is Rs. 70,000 higher than the book value.
Profits for last three years after 40% tax were Rs. 95,000, Rs. 90,000 and Rs. 1,10,000
respectively for year 1, 2 and 3.
Fair return on capital employed is estimated at 10%.
Calculate the value of goodwill by capitalization of Average Profit on the basis of weighted
Average Profit (Weights are to be considered as 1, 2 and 3 for last 3 years respectively). (10)
[Ans. Closing Capital Employed = 9,30,000; Weighted Average Profit = 1,06,233;
Capitalised Value of Goodwill = 1,32,330]
[Note 1: The solution is based on long term approach. However, Students may use
Shareholder’s Fund approach.
Note 2: Alternatively Students may solve the problem using Average Capital Employed
instead of Closing Capital Employed]

10
 MATHUR SIR – 8777249775

GROUP-B
6. Star Ltd. and Lite Ltd. agreed to amalgamate on and from 1st April, 2018. A new company
Starlite Ltd. was formed to take over the business of the amalgamating companies. The
Balance Sheet of Star Ltd. and Lite Ltd. as on 31st March, 2018 are given below:
Particulars Note no. Star Ltd. (Rs. Lite Ltd. (Rs.
In lakhs) In lakhs)
1. Equity and Liabilities:
Share Capital 1 1,100 950
Reserves and Surplus 2 420 330
Long-term Borrowings 60 30
(10% Debentures of 100 each)
Trade Payables 3 420 190
TOTAL 2,000 1,500
2. Assets :
Fixed Assets :
Tangible Assets 4 900 650
Non-current Investments (Investments) 150 50
Inventories (Stock) 350 250
Trade Receivables 300 350
Cash and Cash equivalents (Cash and Bank) 5 300 200
TOTAL 2,000 1,500
Notes to accounts:
Particulars Star Ltd. (Rs. In Lite Ltd. (Rs. In lakhs)
lakhs)
1. Share Capital:
(a) Equity Share of Rs.100 each fully paid 800 750
up 300 200
(b) 12% Preference Shares of Rs.100 each
1,100 950
2. Reserves and Surplus:
(a) Revaluation Reserve 150 100
(b) General Reserve 170 150
(c) Investment allowance Reserve 50 50
(d) Balance in statement of Profit and 50 30
Loss
420 330
Additional Information:
(a) 10% Debenture holders of both companies are discharged by Starlite Ltd. issuing such
number of its 15% Debentures of Rs. 100 each so as to maintain the same amount of
interest earned before amalgamation.

11
 MATHUR SIR – 8777249775

(b) Preference shareholder of old companies are issued equivalent number of 15%
Preference shares of Starlite Ltd. at a price of Rs. 150 per share (face value Rs. 100).
(c) New company will issue 5 equity shares for each equity share of Star Ltd. and 4 equity
shares for each equity share of Lite Ltd. The shares are to be issued at Rs.30 per share,
having a face value of Rs. 10 per share.
(d) Investment Allowance Reserve is to be maintained for 4 more years.
(e) Fixed assets of Star Ltd. and Lite Ltd. are to be taken at Rs. 930 Lakhs and Rs. 620 lakhs
respectively.
Calculate the amount of purchase consideration to be paid to each of the companies and
prepare the balance sheet of Starlite Ltd. after amalgamation. (15)
[Ans. Net Assets Taken over = (Star Ltd.) = 1,570; (Lite Ltd.) = 1,260; Purchase
Consideration (Star Ltd.) = 1,650; (Lite Ltd.) = 1,200; Capital Reserve = (80 – 60) = 20;
Balance Sheet = 3,620]
OR,
The following figures are available from the Balance Sheet of Jagaddhatri Ltd. as on
31.03.2019:
Liabilities Rs.
70,000 Equity Shares of Rs.10 each 7,00,000
5,000 10% Preference Shares of Rs.100 each 5,00,000
9% Debenture 4,00,000
Accrued interest 36,000
Bank Overdraft 2,50,000
Creditors 3,34,000
TOTAL 22,20,000
Assets Rs.
Land 4,00,000
Plant 2,00,000
Patent 40,000
Goodwill 1,20,000
Investments 60,000
Debtors 4,00,000
Stock 4,50,000
Profit & Loss account 5,50,000
TOTAL 22,20,000
A scheme of re-organization as approved by the Court was to take effect on 01.04.2019 by
adopting the following course:
(a) Preference Shares are to be written down to Rs. 75 each and Equity Shares to Rs. 1 each.
(b) Preference dividend were in arrear for 4 years. 1/4th of the total arrear dividend is to be
satisfied by issue of Equity Shares of Rs. 1 each and 3/4th of the claim is to be waived.
(c) Accrued interest on Debentures are to be paid in cash.
(d) Investments are to be sold for Rs. 1,00,000.

12
 MATHUR SIR – 8777249775

(e) Provision for bad debts is to be considered Rs. 9,000.

(f) Plant is valued at Rs. 1,78,000
(g) All the intangible assets are to be written off to maximum extent.
Show the Journal entries including narration to give effect of the above transactions in the
books of the Company. (15)
[Ans. Capital Reserve = 4,000; Capital Reduction = 7,14,000; Accrued Debenture Interest =
36,000]

7. The Trial Balance of Khadim Ltd. as on 31.03.2019 is given below:

Debit Rs. Credit Rs.
Land and Building 80,000 Equity Share Capital (Rs.10 each) 2,40,000
Plant and Machinery 80,000 6% Pref. Share Capital (Rs.100 40,000
Furniture 6,400 each) 6,000
Trade Debtors 72,000 Profit & Loss A/c as on 01.04.2018 9,26,900
Salaries and Wages 1,80,000 Sales 35,200
Investments (40% current) 40,000 Trade Creditors 9,400
Patents 90,000 Provision for Income Tax for the
Repairs and Maintenance 2,000 year 2017 -2018 10,700
Interest on Debenture 2,400 General Reserve 40,000
Vehicles 12,000 12% Debenture 3,200
Sundry expenses 4,000 Interest on Investment
Purchases 6,50,000
Dividend paid 12,000
Dividend Distribution Tax 2,400
Advance Tax for current year 20,000
Carriage Inward 2,800
Cash in hand 3,600
Cash at Bank 6,000
Advance tax paid for the year - 9,200
2017- 2018
Opening Stock 36,000
13,11,400 13,11,400
Additional Information:
(a) Stock at the end of the year 2018-19 valued at Rs. 46,000.
(b) Depreciation is to be provided on the diminishing values of assets as vehicles @ 20%;
Building @ 5%; Machinery @ 15% and Furniture @ 10%. Land and Buildings include Rs.
16,000 as cost of land.
(c) 1/10th of value of patent is to be written off.
(d) The final assessment for 2017 - 18 has been completed and Income Tax Authority has
made a gross demand of Rs. 9,600.
(e) Income Tax Rate for the current year is to be taken 30%.

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(f) The Company resolves to transfer Rs.5, 000 to the General Reserve.
(g) Debentures were issued three years ago.
Prepare
(i) Statement of Profit and Loss for the year ended 31.03.2019 and
(ii) A Balance Sheet on that date.
[Notes on 1: Property, Plant & Equipment; 2: Reserve & Surpluses are to be shown] (15)
[Ans. Total Revenue = 9,30,100; Total Expense = 8,61,440; Profit Before Tax = 68,660;
Profit After Tax = 47,662; Balance Sheet = 4,28,760]

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 MATHUR SIR – 8777249775

2020
CORPORATE ACCOUNTING — GENERAL
Paper: DSE-5.2A
Full Marks: 80
Group - A
Answer any four questions.
1. Sky Ltd. granted 20,000 options at Rs.50 each to its employees under Employees’ Stock
Option Scheme.
The face value of each option was Rs.10 and its market price at that time was Rs.110. The
vesting period was two years. All the employees exercised their options fully. Show the
journal entries in the books of Sky Ltd. 10

2. The following underwriting took place for Pioneer Ltd., which invited applications for
10,000 shares of Rs.10 each:
X: 6,000 shares Y: 2,500 shares Z: 1,500 shares
In addition, there were firm underwriting as follows:
X: 800 shares Y: 300 shares Z: 1,000 shares
Total subscription including firm underwriting was 7,100 shares, and the forms included the
following marked forms:
X: 1,000 shares Y: 2,000 shares Z: 500 shares
You are required to compute the underwriter’s liability in number of shares when the
specific benefit of firm underwriting is to be given to the underwriters. 10

3. Petro Ltd. provides the following information as on 31.03.2020:

Particulars Amount (Rs.)
1,20,000 equity shares of Rs.10 each fully paid 12,00,000
Capital Redemption Reserve 3,00,000
Plant Revaluation Reserve 40,000
Securities Premium 3,00,000
Development Rebate Reserve 4,60,000
Investment Allowance Reserve 5,00,000
General Reserve 6,00,000
On 01.04.2020, the company decided to issue Bonus shares at par to its shareholders at the
rate of 1 share for every 2 shares held and right shares at the rate of 1 share for every 4
shares held at Rs.14 per share.
Show necessary Journal entries in the books of Petro Ltd. to give effect to above
transactions. 10

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4. The Summarized Balance Sheet of Green Private Ltd. as at 31.03.2020 is given below:
Particulars Amount (Rs.)
Share Capital: Equity shares of Rs.10 each 40,000
Reserves and surplus 24,000
Long-term borrowings: 5% Debentures 10,000
Creditors 10,450
Tangible assets 33,900
4% Investment (Face value Rs.8,000) 7,200
Inventories 16,000
Debtors 19,350
Cash and bank 8,000
The net earnings for the last three years were as follows:
Year ended 31.03.2018: Rs.10,100; Year ended 31.03.2019: Rs.10,850; Year ended
31.03.2020: Rs.12,200.
You are required to ascertain the value of goodwill at 3 years’ purchase of super profit (take
simple average profit) assuming normal rate of return on capital employed at 10%. Ignore
income tax. 10

5. The following information is related to Sylvan Ltd. as on 31.03.2020: [Fig. in Rs.]

Building (Market value 5,50,000 Trade payables 14,000
Rs.9,13,000)
Inventories 60,000 Share Capital:
15,000 Equity share of
Rs.10 each, fully paid 1,50,000
Trade receivables 1,24,000 10,000 Equity share of
Rs.10 each, Rs.7 paid 70,000
Cash at bank 1,42,000
8% Debenture 25,000
Calculate the value of each fully paid-up and partly paid-up Equity share. 10

6. The following balances appeared in the books of Kolkata Tubes Ltd. on 31.03.2020
8% Debentures Rs.1,20,000
Sinking Fund (for redemption of debentures) Rs.1,00,000
Sinking Fund Investment in 6% Govt. Bond (Nominal Value
Rs.1,10,000) Rs.1,00,000
On 01.04.2020 all the investments were sold at 90% of nominal value and the debentures
were redeemed at par. Prepare 8% Debentures Account, Sinking Fund Account and Sinking
Fund Investment Account in the books of the company. 10

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 MATHUR SIR – 8777249775

7. State the relevant provisions of the Companies Act, 2013 relating to redemption of
Preference Shares. 10

8. The following balances are included Balance Sheet of E. Ltd. as on 31st March, 2020:
Particulars Amount (Rs.)
6,00,000 Equity Shares of Rs.10 each fully paid 60,00,000
General Reserve 14,00,000
Securities Premium 10,10,000
12% Debentures of Rs.100 each 28,00,000
Trade Payables 9,20,000
On 1st April 2020, the shareholders of the company have approved the scheme of buyback
of equity shares as under:
(a) 20% of the equity shares would be bought back at Rs.16 per share.
(b) Premium payable on buyback of shares should be met from the Securities Premium
Account.
(c) Investments would be sold for Rs.7,80,000 (Book value being Rs.7,40,000).
Pass journal entries to record the above transactions. 10
GROUP – B
Answer any two questions.
9. The directors of Finolex Ltd. have invited an application for 30,000 equity shares of Rs.10
each to be issued at 20% premium. The money payable on the shares are as follows:
On application: Rs.6 per share (including premium of Rs.2);
On allotment: Rs.4 per share;
On call: Balance amount.
Applications were received for 40,000 shares and allotment was made pro-rata amongst the
applicants.
All the shareholders paid their dues within the due time except Miss Ritika, applied for 400
shares, failed to pay the allotment money. Her shares were forfeited after the subsequent
call. 200 forfeited shares were reissued as fully paid on payment of Rs.8 per share to Miss
Ankita.
Show the necessary journal entries (including cash transaction) in the books of Finolex Ltd.
20
10. The Trial Balance of Zee Ltd. as on 31.03.2020 is as below:
Debit Balance Amount Debit Balance Amount
(Rs.) (Rs.)
Stock on 01.04.2019 75,000 Share capital
(Equity shares of ` 10 each) 1,00,000
Purchases 2,40,000 Sales 3,40,00
Wages 35,000 Discount 3,000
Carriage 900 Profit and Loss Balance 15,000

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 MATHUR SIR – 8777249775

Furniture 17,000 Creditors 25,000

Salaries 7,500 Bills Payable 10,000
Rent 10,000 10% Debentures 37,000
Administration expenses 12,000 General Reserve 20,500
Plant and Machinery 70,000
Debtors 35,000
Bills Receivable 5,000
Cash 8,000
Bank 15,000
Long-term investments 20,100
5,50,500 5,50,500
Prepare Statement of Profit and Loss for the year ended March 31, 2020 and Balance Sheet
as at that date considering, the following information:
(a) The authorized capital of the company is Rs.2,00,000
(b) Stock as on 31.03.2020 Rs.88,000
(c) Depreciate Plant & Machinery and Furniture at 10%
(d) The directors recommended:
(i) An equity dividend of 25%
(ii) Transfer 10% of net profit of the period of General Reserve
(e) Ignore Corporate Dividend Tax. 10 + 10

11. (a) Mention the conditions that are to be satisfied (as per AS-14) to consider
amalgamation in the nature of merger.
(b) Som Ltd. agreed to takeover Dove Ltd. on April 1, 2020. The terms and conditions of
takeover were as follows:
(i) Som Ltd. issued 56,000 equity shares of Rs.100 each at a premium of Rs.15 per share to
the equity shareholders of Dove Ltd.
(ii) Cash payment of Rs.39,000 was made to equity shareholders of Dove Ltd.
(iii) 24,000 fully paid preference shares of Rs.50 each issued at par to discharge the
preference shareholders of Dove Ltd.
(iv) The 8% Debentures of Dove Ltd. (Rs.78,000) converted into equivalent value of 9%
Debentures in Som Ltd.
(v) The actual cost of liquidation of Dove Ltd. was Rs.23,000. Liquidation cost is to be
reimbursed by Som Ltd. to the extent of Rs.15,000.
You are required to:
(1) Calculate the amount of Purchase Consideration as per the provisions of AS-14; and
(2) Show necessary Journal entries in the books of Som Ltd. for discharge of Purchase
Consideration. 5 + (8 + 7)

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12. Following balance were available from the Balance Sheet of Timtim Ltd. as at
31.03.2020:
Particulars Amount (Rs.)
3,000 6% Preference shares of Rs.100 each, fully paid-up 3,00,000
45,000 Equity shares of Rs.10 each, fully paid-up 4,50,000
Profit and Loss Account Debit Balance (1,50,000)
Bills Payable 50,000
Sundry Debtors 60,000
Bank Overdraft 1,00,000
Land and Building 2,70,000
Plant and Machinery 2,40,000
Goodwill 42,300
Patent 18,000
Inventory 88,800
Debtors 1,50,900
Dividends on Preference Shares are in arrear for three years. The company passes a special
resolution to reduce its capital in accordance with the following scheme and the same is
duly sanctioned by the Court:
(a) Each 6% preference share is converted to 8%, Preference shares of Rs.75 each, fully paid.
The value of equity shares is brought down to Rs.8 per share fully paid.
(b) The arrears of dividend on preference shares are sacrificed by the preference
shareholders.
(c) Goodwill to be written off fully.
(d) Land & Building and Plant & Machinery are revalued at 135% and 80% of their respective
book values.
(e) Book debts worth Rs.7,200 are to be treated as bad and hence to be written off.
(f) The balance of total capital reduction is to be utilized in writing down patents.
Give necessary Journal entries to give effect to the above. 20

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2020
CORPORATE ACCOUNTING (HONOURS)
Paper: DSE– 5.2A
Full Marks: 80
Group – A
Answer any four Questions:
1. Ex Ltd. had Rs.12,00,000 in Capital Redemption Reserve, Rs.10,00,000 in Securities
Premium and Rs.15,00,000 credit balance in its Statement of Profit & Loss.
It issued 20,000 bonus shares of Rs.100 each as fully paid at par and 5,000 right shares of
Rs.100 each fully paid at Rs.125 to its shareholders.
A. Ltd. received 1200 such bonus shares and entitled to 300 right shares, which it accepted.
Show necessary journal entries (without narrations) in the books of Ex Ltd. and in the books
of A Ltd. for the above. 10

2. X Ltd. issued 20,000 shares of Rs.100 each at a premium of Rs.10 per share. The entire
issue was underwritten as follows:
A – 10,000 shares, B – 6,000 shares, C – 4,000 shares.
The firm underwriting was to be: A – 2,000 shares, B – 1,000 shares and C – 1,000 shares.
Shares applied for were 18,000 (including firm underwriting). Marked applications being, A –
7,000 shares, B – 2,800 shares and C – 3,200 shares.
Calculate the liability of the underwriters (in number of shares). 10

3. Following figures are available from the Balance Sheet of King Ltd. as on 31.03.2019 (in
Rs.):
Particulars Rs.
Equity shares of Rs.100 each, fully paid up 3,00,000
Securities Premium 1,00,000
General Reserve 6,00,000
Balance in the statement of Profit & Loss (cr.) 10,00,000
Capital Reserve 2,00,000
Cash and Bank 5,00,000
Investments (face value Rs.4,00,000) 3,20,000
The company decided to buy-back 6,000 equity shares at Rs.125 per share. For this purpose,
it decided to issue 2,000 10% Preference Shares of Rs.100 each at 10% premium. It also sold
3/4th of the investments @ 75% of the face value.
Pass necessary journal entries in the books of King Ltd to give effect to the above
(Narrations not required). 10

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4. From the following particulars of K. Ltd., calculate the value of equity share under (a)
intrinsic value method and (b) earnings-yield method. 5+5

Tangible assets Rs.11,60,000; Goodwill Rs.1,00,000; Current Assets Rs.3,60,000; Discount on

issue of debentures Rs.20,000; 5% Debentures Rs.2,00,000; Current Liabilities Rs.2,60,000.
The net profits after tax for three years were: 2017-18 Rs.1,03,200; 2018-19 Rs.1,04,000;
2019-20 Rs.1,03,300.
It is the practice of the company to transfer 20% of the profit to Reserves. Normal rate of
return is 10%. Issued and paid-up Equity Capital – 80,000 Equity shares of Rs.10 each fully
paid-up.

5. The following balances appear in the books of A Ltd. as on 31.03.2019:

Particulars Rs.
13% Debentures Account 14,00,000
Debenture Redemption Fund Account 10,00,000
13% Debenture Redemption Fund Investment Account 10,00,000
The annual contribution to the Debenture Redemption Fund was Rs.1,40,000. The company
sold its investments for Rs.14,00,000 and redeemed the debentures on 31.03.2020.
Prepare 13% Debentures Account, Debenture Redemption Fund Account and 13%
Debenture Redemption Fund Investment Account up to 31.03.2020. 2+6+2

6. Sunshine Ltd. granted options on 1st April, 2015 for 1500 shares of Rs.10 each at Rs.80
each, when the market price was Rs.160 each. The vesting period was 3 years. The
maximum exercise period was 1 year. All the 1500 options were exercised by the employees
on 31st October, 2018.
Show necessary journal entries to record the above transactions in the books of the
company (Narrations required). 10

7. The capital structure of a company as on 31.03.2020 consisted of 20,000 equity shares of

Rs.10 each fully paid up and 1,000, 8% Redeemable preference shares of Rs.100 each fully
paid up. Undistributed reserves and surplus were as under:
Particulars Rs.
General Reserve 80,000
Balance in Statement of Profit & Loss 32,000
Cash at Bank amounted to Rs.98,000. Preference shares are to be redeemed at a premium
of 10% and for the purpose of redemption, the directors are empowered to make fresh
issue of equity shares at par after utilizing the reserves and surplus subject to the condition
that a sum of Rs.25,000 shall be retained in General Reserve.
Pass necessary journal entries to give effect to the above arrangements (narration required)
and also all relevant workings. 10

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8. Calculate the value of goodwill under:

(a) 5 years’ purchase of Super Profit method and (b) Capitalization of Average Profit method
from the following information:
(i) Capital employed as per last balance sheet Rs.6,30,000
(ii) Normal rate of profit 10%
(iii) Net profit before tax (tax rate 35%)
1st year Rs.1,05,000 4th year Rs.2,00,000
2nd year Rs.1,45,000 5th year Rs.1,50,000
3rd year Rs.1,75,000
(iv) Non-trading income Rs. 5,00,000 and Interest on long-term borrowings Rs.10,000 on an
average
included in the statement of Profit & Loss.
(v) Fixed assets revalued by Rs.20,000 more than the balance sheet value.
Use simple average method for determining average profit and ignore depreciation on
increased value of fixed assets. 10
GROUP – B
Answer any two Questions.
9. Care Ltd. invited applications for 10,000 shares of Rs.10 each at 10% premium payable as
– on application Rs.4; on allotment Rs.3 (including premium) and balance on one call.
Applications were received for 17,000 shares and after rejecting applications for 1,000
shares the company issued all the shares on proportionate basis. All amount due was
received except the following:
Mr. A holding 500 shares failed to pay allotment and call money.
Mr. B holding 400 shares failed to pay call money.
All these shares were forfeited after call. All forfeited shares were re-issued to Mr. C as fully
paid @ Rs.8 per share.
Show necessary journal entries (including cash transactions) in the books of Care Ltd.
(Narrations not required) 20

10. (a) State the conditions to be satisfied as per AS 14 in case of amalgamation in the
nature of merger.
(b) Distinguish between pooling of interest method and purchase method of accounting for
amalgamation in the books of transferee company. 10 + 10

11. The Balance Sheet of B. Ltd. as on 31.03.2019 is as below:

Particulars Amount (Rs.)
I. Equity and Liabilities:
1. Shareholders’ Funds:
(a) Share Capital:
(i) Equity share capital (Rs.10 each) 5,00,000
(ii) 7% Cumulative Preference share capital (Rs.100) 10,00,000

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(b) Reserves and Surplus:

(i) Balance in statement of Profit and Loss (5,00,000)
2. Non-current Liabilities:
(a) Long-term Borrowings (8% Debentures) 1,00,000
3. Current Liabilities:
(a) Trade Payables (Trade Creditors) 5,00,000
Total 7,00,000
II. Assets:
1. Non-current Assets:
(a) Fixed Assets:
(i) Tangible Assets:
Buildings 1,00,000
Machinery 4,00,000
(ii) Intangibles (Goodwill) 40,000
2. Current Assets:
(a) Inventories (Stock) 60,000
(b) Trade Receivables (Sundry Debtors) 90,000
(c) Cash and Cash equivalents (Bank) 10,000
Total 7,00,000
Note: Contingent liability for Arrear Preference Dividend for 3 years.
A scheme of internal reconstruction is approved by the court in the following lines:
(a) Paid up value of equity share capital is to be reduced to 10%;
(b) Preference shareholders are to be issued 8%, 7 Preference shares of Rs.10 each in
exchange of each existing preference share.
(c) Preference shareholders are to be issued similar preference share for one-third of arrear
dividend. The balance of arrear dividend are to be cancelled.
(d) 8% Debenture-holders agreed to sacrifice 20% of their claim for increase of interest to
10%.
(e) Building is valued at Rs.1,50,000.
(f) Losses and intangible assets are to be written off.
Pass necessary journal entries (without narration) giving effect to the above scheme and
prepare are vised Balance Sheet of the company. 12+8

12. Following is the Trial Balance of Zoom Ltd., a trading concern, as at 31.02.2020:
Debit Balance Amount Debit Balance Amount
(Rs.) (Rs.)
Stock on 01.04.2019 1,86,000 Sales 11,90,000
Purchases 7,20,000 Return outward 10,000
Return Inward 12,000 10% Bank Loan 60,000
Wages 1,10,000 Sundry Creditors 50,000

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Carriage Inward 5,000 Bills Payable 12,000

Sundry manufacturing 18,000 Profit & Loss Balance (Cr.) 26,000
expenses (01.04.2019)
Interest on Bank loan 5,000 General Reserve 12,000
Office salaries 18,000 Securities Premium 24,000
Auditor’s fees 9,000 Share Capital 4,00,000
Directors’ remuneration 32,000
Freehold Premises 1,64,000
Plant and Machinery 1,30,000
Furniture and Fittings 42,000
Patents 20,000
Interim dividend paid 20,000
Sundry Debtors 96,000
Bills Receivable 29,000
Cash and Bank 85,000
Advance Tax for 2019-20 83,000
17,84,000 17,84,000
You are required to prepare the Statement of Profit & Loss for the year ended 31.03.2020
and the
Balance Sheet as at that date after taking into account the following:
(a) Stock on 31.03.2020 was valued at ` 1,25,000
(b) Bank loan was taken on 01.04.2019.
(c) Depreciation is to be provided on Plant and Machinery @ 20% and on Furniture and
Fittings @10%.
(d) 1/4th of Patents is to be amortized.
(e) Provision for tax is to be maintained @ 30%
(f) 10% of profit for the year is to be transferred to General Reserve.
(g) Ignore tax on dividend. 20

24