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Amity CampusUttar PradeshIndia 201303

ASSIGNMENTSPROGRAM: BFIA

SEMESTER-II

Subject Name: Corporate AccountingStudy COUNTRY: SOMALIARoll Number (Reg. No.): BFIA01512010-2013019Student Name: MOHAMED ABDULLAHI KHALAF

INSTRUCTIONS

a) Students are required to submit all three assignment sets.ASSIGNMENT DETAILS MARKSAssignment A Five Subjective Questions 10Assignment B Three Subjective Questions + Case Study 10Assignment C Objective or one line Questions 10b) Total weight-age given to these assignments is 30%. OR 30 Marksc) All assignments are to be completed as typed in word/pdf.d) All questions are required to be attempted.e) All the three assignments are to be completed by due dates and

need to be submitted for evaluation by Amity University.f) The students have to attach a scanned signature in the form.

Signature : ________________ Date: 03 – Sept. – 2011

( √ ) Tick mark in front of the assignments submitted

Assignment A’ Assignment ‘B’ Assignment ‘C’

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Corporate AccountingAssignment A

Q: 1). A company issued 50000 equity shares of Rs. 10 each to thepublic, on the following terms: - Rs. 2 on application, Rs. 3 allotment,and the balance in two equal calls. The public applied for 8000shares for which allotment took place on 1st April, 2008. All moneydue to allotment and calls was duly received except for oneshareholder holding 500 shares who failed to pay both the calls andone holder who was the holder of 450 shares did not pay only finalcall. Pass journal entries and ledger into balance sheet.

Solution:Date Particulars L.F Debit Credit01/04/2008 Bank A/c Dr 16000

To Share Application A/c 16000(Being share application moneyreceived)

To Share Application A/c 16000To Share Capital A/c 16000

(Being share application moneytransferred to share capital A/c)

Bank A/c Dr 24000To Share Allotment A/c 24000

(Being share allotment money received)

Share First Call A/c Dr 20000To Share Capital A/c 20000(Being share first call money due)

Bank A/c Dr 18750Calls in Arrears Dr 1250

To Share first call A/c 20000

Share Second & Final Call A/c Dr 20000To Share Capital A/c 20000(Being share second & final call moneydue)Bank A/c Dr 17625Calls in Arrears Dr 2375

To Share Second & Final Call A/c 20000

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Balance sheet

Liabilities Amount Assets AmountShare capital Current assetsAuthorized capital:-50,000 shares of Rs. 10 each

500,000 Cash at bank 76375

Issued capital:-50,000 shares of Rs. 10 each

500,000

Subscribed and paid share capital:-8,000 shares of Rs. 10 each.

Rs. 80,000Calls in arrears: 3,625 76375

76375 76375Q: 2). A company has decided to increase its existing share capital

by bringing out a rights issue for the existing shareholders in theproportion of two new shares for every ten shares held. Calculate theprice of right, if the market value of the shares at the time of theannouncement of the right issue is Rs. 500. The company hasdecided to give shares of Rs. 200 each at a premium of Rs. 110 each.

Solution:

Market value of 10 shares required to be held by share holders:

10x500 = 5000 Issue price of two right shares

2x310 = 620

Total Price of 12 shares = 5620

Average price of one share:

= 5620/12

= 468

Therefore the value of right issue =

= Market value – Average price of share

= 500 – 468

= Rs.32

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Q: 3). ABC Co. Ltd. Issued 500,000 Equity shares of Rs.10 each and30000, 10% Preference shares of Rs.100 each, all shares being fullypaid. On 31.3.08, Profit and Loss Account showed an undistributedprofit of Rs. 50,000 and General Reserve Account stood atRs.120,000 On 2.4.08, the directors decided to issue 15000, 6%Preference shares of Rs.100 each for cash and to redeem the existingpreference shares at Rs.105 utilizing as much as would be requiredfor the purpose. Show the journal entries to record the transactions.

Solution:

Date Particulars L.F Debit Credit02/04/08 10 % preference share capital A/c Dr 3000000

Premium on redemption of preferenceshare A/c Dr 150000

To Preference shareholders A/c 3150000(Being amount payable on redemption of3000 preference shares, with premium of5 %).

Bank A/c Dr 1500000To 6 % Preference Share Capital A/c 1500000

(Being the amount received on issue of1500, 6% Preference shares of Rs.100each made for the purpose of redemptionof preference shares as per Board‘sResolution dated).

General Reserve A/c Dr 1500000To Premium on Redemption ofPreference shares capital A/c

1500000

(Being the amount written off againstgeneral reserve)

General Reserve A/c Dr 105000Profit & Loss A/c Dr 1395000

Capital Redemption reserve A/c 1500000(Being amount transferred equal to thedifference between the nominal value ofshares redeemed and proceeds of newissue).

Preference shareholders A/c Dr. 3150000To Bank 3150000

(Being the amount due to preferenceshareholders paid).

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Q: 4). Journalize transactions when debentures are issued asfollows:-

1) At par of 15%, 2500 debentures of Rs. 100 each, redeemable at par.2) At 10% discount 12%, 1000 debentures of Rs. 100 each,

redeemable at par.3) At 10% premium 11%, 3500 debentures of Rs. 100 each,

redeemable at par.4) At par 12%, 2000 debentures of Rs. 100 each, redeemable at a

premium of 5%.5) At 5% premium 12%, 1900 debentures of Rs. 100 each, redeemable

at 10% premium.6) At 5% discount of 12%, 3600 debentures of Rs. 100 each, and

redeemable at 15% premium.

Solution:Journal Entries

Date Particulars L.F Debit Credit1 Bank A/c Dr 250000

To 15 % Debentures A/c 250000(Issue of debentures at par and redeemable at par)

2 Bank A/c Dr 90000Discount on Issue of Debentures A/c Dr 10000

To 12 % Debentures A/c 100000

3 Bank A/c Dr 385000To 11 % Debentures A/c 350000

To security premium on issue of debentures A/c 35000

4 Bank A/c Dr 200000Loss on issue of debentures A/c Dr. 100000

To 12 % Debentures A/c 200000To security premium on redemption of debentures A/c 100000

5 Bank A/c Dr 285000Loss on issue of debentures A/c Dr. 19000

To 12 % Debentures A/c 190000To security premium on issue of debentures A/c 95000

To security premium on redemption of debentures A/c 19000

6 Bank A/c Dr 342000Discount on Issue of Debentures A/c Dr 18000Loss on issue of debentures A/c Dr 54000

To 12 % Debentures A/c 360000To security premium on redemption of debentures A/c 54000

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Q: 5). H Ltd. acquires 3/4 shares of the share capital of S ltd. As on31st March 2006, when the balance sheets of both the companieswere as under:-

Balance Sheet As on 31st March, 2008

Liabilities H ltd. S ltd. Assets H ltd. S ltd.Share capital (inRs. 10 shares)

200000 100000 Fixed assets 200000 100000

General reserve 50000 30000 Current assets 130000 120000Profit & loss A/c 30000 20000 Shares in S ltd. 100000 -10% debentures 100000 50000Sundry creditors 50000 20000

430000 220000 430000 220000

Prepare the consolidated balance sheet as on 31st March, 2008.

Solution:

Consolidated Balance SheetAs on 31st March, 2006

Liabilities H ltd Assets H ltdShare capital (in Rs. 10 shares) 200000 Fixed Assets:-General reserve 50000 H 200000

S 100000 300000Capital Reserve 12500Profit & Loss A/c 3000010% debentures:- 50000 Current Assets:-H 100000S 50000 150000

H 130000S 120000 250000

Sundry Creditors:-H 50000S 20000 70000Minority Interest 37500

550000 550000

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Assignment B (Three Analytical Questions)

Q: 1). A company issue 20000 debentures of Rs. 100 each, payableRs. 10 on application, Rs. 30 on allotment, and the balance on firstand final call. Application were received for 24000 debentures, Athe applicant of 1000 debentures was refused allotment and B theapplicant of 8000 debentures were allotted 5000 debentures.Excess application money was adjusted towards allotment. Adebenture holder holding to whom 600 debentures were allotteddid not pay his money due on first and final call. Pass thenecessary journal entries.

Solution:

S. No. Particulars L.F Debit Credit1 Bank A/c Dr 240000

To debenture application A/c 240000(Being debenture application moneyreceived)

2 Debenture application A/c Dr 240000To debentures A/c 200000

To debenture allotment A/c 30000To bank A/c 10000

(Being debenture application moneytransferred to debenture account and excessmoney adjusted)

3 Debenture allotment A/c Dr 600000To debentures A/c 800000

(Being debenture allotment money due)

4 Bank A/c Dr 570000Debenture Allotment A/c 570000

(Being debenture allotment money received)

5 Debenture first & final call A/c Dr 1200000To debentures A/c 1200000

(Being debenture call money due)

6 Bank A/c Dr 1200000Debenture first & final call A/c 1200000

(Being debenture call money received)

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Q: 2). The following are the two balance sheets of H ltd. and S ltd.as on 31st March 2005:-

Liabilities H ltd. S ltd. Assets H ltd. S ltd.Sharecapital

Fixed assets 550000 100000

Equityshares

800000 200000 75% sharesin S ltd.(atcost)

280000 -

Generalreserve

150000 70000 Stock 105000 177000

Profit & lossA/c

90000 55000 Other currentassets

225000 128000

Creditors 120000 80000

1160000 405000 1160000 405000

Draw a consolidated balance sheet as on 31st March, 2005 after takinginto consideration the following information:-

i) H ltd. acquired the shares on 31st July, 2004.ii) S Ltd. earned a profit of Rs. 45000 for the year ended 31st

March, 2005.

Solution:Consolidated Balance Sheet

As on 31st March, 2005Liabilities H ltd Assets H ltd

Share capital Fixed assets 650,000Equity shares 800,000General reserve 150,000 Stock 282,000Profit & loss 98,000 Other current assets 353,000CreditorsH ltd 120,000 Good-will 28,000S ltd 80,000 200,000Minority interest 65,000Total 1,313,000 1,313,000

Q: 3). Rakesh ltd. issued 10000 shares of Rs. 10 each at Rs. 11 pershare. Share money was payable as follows:-

On application Rs. 2, on allotment Rs. 5, and on call Rs. 4. The offer wasover subscribed by 5000 shares and the applicants were allotted shares

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on pro rata basis. Surplus application money was adjusted for futureshare dues. All shares were fully called up and money was receivedexcept on 300 shares of Raja who did not pay allotment and call money.The company later on forfeited his shares, and reissued at a discount ofRs. 2 per share.

Give Cash book and journal entries in the books of a company.

Solution:

Date Particulars L.F Debit CreditBank A/c Dr. 30000To share application A/c 30000(Being share application money received)Share application A/c Dr. 30000To share capital A/c 30000(Being share application money transferred toshare capital A/c)Share allotment A/c Dr 75000To share capital A/c 60000To securities premium A/c 15000(Being share allotment money due)Bank A/c Dr 73500Calls in arrears A/c Dr. 1500To share allotment A/c 75000(Being share allotment money received)Share first call A/c Dr. 30000To share capital A/c 30000(Being share first call money due)Bank A/c Dr 29400Calls in arrears A/c Dr. 600To share first call A/c 30000(Being share first call money due)Share second & final call A/c Dr. 30000To share capital A/c 30000(Being share second & final call money due)Bank A/c Dr. 29400Calls in arrears A/c Dr. 600To share second & final call A/c 30000(Being share second & final call money received)Share capital A/c Dr 3000Securities premium A/c Dr. 300To share allotment A/c 1500To share first call A/c 600To share second call A/c 600

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To forfeited share A/c 600(Being 300 shares were forfeited for non-paymentof first and second call)Bank A/c Dr 3000Forfeited share A/c Dr 300To share capital A/c 3300(Being 250 shares reissued at a discount of Rs. 2per share)Forfeited share A/c Dr.To capital reserve A/c(Being balance of forfeited share A/c transferred tocapital reserve A/c)

Cash Book

Date Particulars Amount Date Particulars AmountTo share application A/c 30000 By balance c/d 162300To share allotment A/c 73500To share first call A/c 29400To share final call A/c 29400Total 162300 162300

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Case StudyThe balance sheet of Chandan Limited as on 31 December 1998 was asfollows:-

Liabilities Amount Assets AmountShare capital Fixed assets10000, 6% redeemablepreference shares of Rs. 10each fully paid

100000 Land & building 150000

50000 equity shares of Rs.10 each fully paid

500000 Plant & machinery 200000

General reserve 90000 Current assetsProfit & loss A/c 230000 Stock 2500008% debentures 50000 Debtors 180000Sundry creditors 70000 Cash and bank 260000

1040000 1040000

The directors of the company decided to:-

a) Redeem preference shares at a premium of 5%b) Redeem debentures at a premium of 10%;c) Bring out a bonus issue for the equity shareholders of one Rs. 10

equity share held in order to capitalize a part of the undistributedprofit.

Show:-

The appropriate journal entries to record the transactions in thebooks of the company;

The balance sheet as it would appear after the completion of thetransactions.

Solution for case studyDr Cr

A) 6% preference share capital a/c 100,000

Premium on redemption of 6% preference shares 5,000

To 6% preference shareholders a/c 105,000

(Being amount payable on redemption 10,000 preference)

General reserve A/c 5,000

To premium on redemption A/c 5,000

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(Being amount writing off against general reserve)

General reserve A/c 85,000

Profit & loss A/c 15,000

To capital redemption reserve A/c 100,000

(Being amount transfer to capital redemption reserve)

6% preference shareholders A/c 105,000

To bank A/c 105,000

B) 8% debenture A/c 50,000

Premium on redemption of debenture A/c 5,000

To debenture holders A/c 55,000

Profit & loss A/c 5,000

To premium on redemption of debenture A/c 5,000

Profit & loss A/c 50,000

To debenture redemption reserve A/c 50,000

8% debenture holders A/ c 55,000

To bank A/c 55,000

(Being amount paid to 8% debenture holders)

C) Capital redemption reserve A/c 50,000

To bonus to shareholders A/c 50,000

Bonus to shareholders A/c 50,000

To equity share capital A/c 50,000

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Balance sheet

Liabilities Amount Assets Amount

Issued fixed asset

Subscribed land & Building 150,000

Capital

Plant & Machine 200,000

10,000 Current assets

Equity shares of

Rs . 10 each fully paid 550,000 Stock 250,000

Of the above shares have been

Allotted as fully paid bonus debtors 180,000

Cash & bank 100,000

Preserve & surplus

Share

Capital redemption reserve 50,000

Account (100,000 – 50,000)

Debenture redemption reserve 50,000

Profit & loss a/c 160,000

Sundry creditors 70,000

Total 880,000 880,000

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Assignment C (Multiple choice Objective Questions)

Multiple Choice Questions

Q: 1). The rate of discount on shares cannot exceed:-a) 5%b) 10% (√)c) 20%d) 6%

Q: 2). The share premium amount will be shown under theheading:-a) Share capitalb) Current liabilitiesc) Reserves & surplus (√)d) Current assets

Q: 3). Which of the following should be deducted from the sharecapital to determine the paid up capital:-a) Calls in advanceb) Calls in arrears (√)c) Securities premiumd) Discount on issue of shares

Q: 4). The profit on reissue of forfeited share is transferred to----a) Capital A/cb) Capital reserve A/c (√)c) Capital redemption A/cd) Redemption of share A/c

Q: 5). Share allotment is a ------ A/c.a) Real A/c (√)b) Personal A/cc) Impersonal A/cd) None of the above

Q: 6). Now, a company can buy back more than ----- per cent ofits shares.a) 20%b) 30%

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c) 25% (√)d) 15%

Q: 7). Any premium payable on the redemption of preferenceshares must be from the ---- account or from the divisibleprofits of the company.a) Security premium (√)b) Discount on issue of sharesc) Dividendd) Capital redemption

Q: 8). Fresh issue of shares for redemption can be made at par,premium or -----a) Face increaseb) Discount (√)c) Premiumd) None of the above

Q: 9). After realizing all the investments in the sinking fundinvestment account is transferred to ----a) Profit & loss A/cb) Debentures A/cc) Capital reserved) Sinking fund A/c (√)

Q: 10). Premium on redemption of debenture a/c is in the natureof:-a) Personal A/cb) Real A/cc) Nominal A/c (√)d) Impersonal A/c

Q: 11). The following journal entry is passed in the books of Arunlimited:-

7% debenture A/c Dr. 160000Premium on redemption of debenture A/c Dr. 6000

To bank A/c 147200To profit on cancellation of debenture A/c 18800

a) Parb) Rs. 92 (√)

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c) Rs. 90d) Rs. 95

Q: 12). The books of ABC Limited showed the following journalentry:-

Bank A/c Dr. 96000Loss on issue of debenture A/c Dr. 10000

To 10% debenture 100000To premium on redemption 6000

Debentures have been issued at a discount:-

a) 10 %b) 5%c) 6%d) 4 % (√)

Q: 13). Own debenture amount will appear on the ---- side of thebalance sheet.a) Liabilityb) Asset (√)c) Under the balance sheetd) Profit & loss A/c

Q: 14). Debenture holders are entitled to receive ---- at fixed rate.a) Interest (√)b) Dividendc) Bonusd) All of the above

Q: 15). The company can ----- its own debentures.a) Purchaseb) Sellc) Resell (√)d) Mortgage

Q: 16). Loss on the issue of debenture account is ---- asset.a) Currentb) Fictitious (√)c) Fixedd) Tangible

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Q: 17). Provision of funds must be made, if debentures are to beredeemed by ---- method.a) Debenture redemption fundb) Sinking fund (√)c) Sinking fund investmentd) All of the above

Q: 18). Own debentures purchased by the company will be shownon the ---- side of the balance sheet.a) Liabilitiesb) Profit & loss A/cc) Assets (√)d) Purchase book

Q: 19). While redeeming the debenture the debenture accountshould be debited at its ---- value.a) Annual valueb) Market valuec) Net valued) Face value (√)

Q: 20). The balance of debenture redemption reserve account istransferred to ---- after all the debentures are redeemed.a) General reserve (√)b) Secured loanc) Unsecured loand) Capital reserve

Q: 21). From the cum-interest price the debenture can becalculated by ------ the interest of the expired period.a) Addingb) Multiplyingc) Subtracting (√)d) Dividing

Q: 22). Loss on sale of sinking fund investment is to be debitedto ---- account.a) Sinking fund account (√)b) Sinking fund investment accountc) Capital reserve account

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d) Capital redemption fund account

Q: 23). Public Limited Companies cannot issue:-a) Equity sharesb) Preference sharesc) Deferred shares (√)d) Bonus shares

Q: 24). The minimum share application money is:-a) Rs. 2 per shareb) 5% of the nominal value of shares (√)c) 50% of the nominal value of sharesd) 20% of the nominal value of shares

Q: 25). Right shares mean the shares which are:-a) Issue to the directors of the companyb) First offered to the debenture holderc) First offered to the existing share holders (√)d) Issued by a newly formed company

Q: 26). Equity share holders are:-a) Creditorsb) Owners (√)c) Customersd) Suppliers

Q: 27). Subject to the permission allowed, the maximumallowable discount on equity shares is:-a) 10 % (√)b) 5%c) 15%d) 20%

Q: 28). Premium on issue of shares can be used for:-a) Distribution of profitsb) Issue of bonus shares (√)c) Paying the remuneration to the directorsd) Issue of debentures

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Q: 29). The balance of the share forfeited account after thereissue of forfeited shares is transferred to:-a) General reserveb) Capital redemption reservec) Capital reserve (√)d) Sinking fund

Q: 30). Balance of share forfeiture account is shown in thebalance sheet under the item:-a) Current liabilities and provisions (√)b) Reserves and surplusc) Share capital accountd) Unsecured loans

Q: 31). If a share of Rs. 10 on which Rs. 6 has been paid, isforfeited it can be re issued at a maximum price of:-a) Rs. 6 per shareb) Rs. 4 per share (√)c) Rs. 10 per shared) Rs. 3 per share

Q: 32). Debentures represents:-a) The investment of equity share holdersb) Director’s share in businessc) Long term liability of a business (√)d) Asset of a company

Q: 33). Debentures issued as collateral security for Rs. 100000should be debited to:-a) Debenture suspense A/c (√)b) Bank accountc) Debenture accountd) Capital account

Q: 34). The balance of sinking fund account after redemption ofdebentures is transferred to:-a) Profit & loss accountb) General reserve account (√)c) Debenture accountd) Sinking fund investment account

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Q: 35). The balance of sinking fund investment account afterrealization of investments is transferred to:-a) Profit & loss accountb) Debenture accountc) Sinking fund account (√)d) Sinking fund investment account

Q: 36). Profit on cancellation of own debentures is transferredto:-a) Capital reserve (√)b) Dividend equalization fundc) Profit & loss accountd) None of the above

Q: 37). If debentures of the face value of Rs. 50000 are issued ata discount of 10% for net assets worth Rs. 40000 the balanceof Rs. 5000 will be debited to:-a) Goodwill account (√)b) Capital reserve accountc) Profit & loss accountd) None of the above

Q: 38). A floating charge generally cover all the :-a) Fixed assets of the company including future oneb) Current assets of the company including future onec) All the assets of the company including future one (√)d) Fictitious assets of the company including future one

Q: 39). Pricing of public issue is determined by:-a) The SEBIb) The company in consultation with stock exchange and SEBIc) The company in consultation with lead manager (√)d) All of the above

Q: 40). Book building is a method of:-a) Price estimation for issue of shares to the public (√)b) Allotment of sharesc) Redemption of sharesd) Redemption of debentures