Corporate Accounting Assignment

Corporate Accounting
Copyright Amity University

ASSIGNMENTS
PROGRAM: B-COM
SEMESTER-II

Subject Name :
Batch :
Roll Number (Reg.No.) :
Student Name :

INSTRUCTIONS
a) Students are required to submit all three assignment sets.

ASSIGNMENT DETAILS MARKS
Assignment A Five Subjective Questions 10
Assignment B Three Subjective Questions + Case Study 10
Assignment C 40 Objective or one line Questions 10

b) Total weightage given to these assignments is 30%. OR 30 Marks
c) 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 attached a scan signature in the form.

Signature :
Date :

( ) Tick mark in front of the assignments submitted
Assignment
A

Assignment B

Assignment C




Assignment A

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

2. A company has decided to increase its existing share capital by bringing out a rights issue
for the existing shareholders in the proportion of two new shares for every ten shares held.
Calculate the price of right, if the market value of the shares at the time of the announcement of
the right issue is Rs. 500. The company has decided to give shares of Rs. 200 each at a premium
of Rs. 110 each.

3. ABC Co. Ltd. Issued 50,0000 Equity shares of Rs.10 each and 30000, 10% Preference
shares of Rs.100 each, all shares being fully paid. On 31.3.08, Profit and Loss Account showed
an undistributed profit of rs.50,000 and General Reserve Account stood at Rs.1,20,000. On
2.4.08, the directors decided to issue 15000, 6% Preference shares of Rs.100 each for cash and
to redeem the existing preference shares at Rs.105 utilizing as much as would be required for
the purpose. Show the journal entries to record the transactions.

4. Journalise transactions when debentures are issued as follows:-



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.

5. H Ltd. acquires 3/4 shares of the share capital of S ltd. As on 31
st
March2006, when the
balance sheets of both the companies were as under:-

Balance Sheet
As on 31
st
March, 2008
Liabilities H ltd. S ltd. Assets H ltd. S ltd.
Share capital (in
Rs. 10 shares)
200000 100000 Fixed assets 200000 100000
General reserve 50000 30000 Current assets 130000 120000
Profit & loss
A/c
30000 20000 Shares in S ltd. 100000 -
10% debentures 100000 50000

Sundry creditors 50000 20000

430000 220000

430000 220000

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


Assignment B (Three Analytical Questions)

1. A company issue 20000 debentures of Rs. 100 each, payable Rs. 10 on application, Rs.

30 on allotment, and the balance on first and final call. Application were received for 24000
debentures, A the applicant of 1000 debentures was refused allotment and B the applicant of
8000 debentures were allotted 5000 debentures. Excess application money was adjusted
towards allotment. A debenture holder holding to whom 600 debentures were allotted did not
paid his money due on first and final call. Pass the necessary journal entries.

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

Liabilities H ltd. S ltd. Assets H ltd. S ltd.
Share capital

Fixed assets 550000 100000
Equity shares 800000 200000 75% shares in S
ltd.(at cost)
280000 -
General reserve 150000 70000 Stock 105000 177000
Profit & loss
A/c
90000 55000 Other current
assets
225000 128000
Creditors 120000 80000

1160000 405000

1160000 405000

Draw a consolidated balance sheet as on 31
st
March, 2005 after taking into consideration the
following information:-
i) H ltd. acquired the shares on 31
st
July, 2004.
ii) S Ltd. earned a profit of Rs. 45000 for the year ended 31
st
March, 2005.

3. Rakesh ltd. issued 10000 shares of Rs. 10 each at Rs. 11 per share. Share money was payable


as follows:-
On application Rs. 2, on allotment Rs. 5, and on call Rs. 4. The offer was over subscribed by

5000 shares and the applicants were allotted shares on pro rata basis. Surplus application money
was adjusted for future share dues. All shares were fully called up and money was received
except 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 of Rs. 2 per share.
Give Cash boo and journal entries in the books of a company.

Case Study

The balance sheet of Chandan Limited as on 31 December 1998 was as follows:-

Liabilities Amount Assets Amount
Share capital

Fixed assets

10000, 6%
redeemable
preference shares of
Rs. 10 each fully
paid
100000 Land & building 150000
50000 equity shares
of Rs. 10 each fully
paid
500000 Plant & machinery 200000
General reserve 90000 Current assets

Profit & loss A/c 230000 Stock 250000
8% debentures 50000 Debtors 180000
Sundry 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 undistributed profit.
Show:-

The appropriate journal entries to record the transactions in the books of the company;
The balance sheet as it would appear after the completion of the transactions.


Assignment C (Multiple choice Objective Questions)

Multiple Choice Questions

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

2. The share premium amount will be shown under the heading:-
a. Share capital
b. Current liabilities

c. Reserves & surplus
d. Current assets

3. Which of the following should be deducted from the share capital to determine the paid up
capital:-
a. Calls in advance
b. Calls in arrears
c. Securities premium

d. Discount on issue of shares

4. The profit on reissue of forfeited share is transferred to----
a. Capital A/c


b. Capital reserve A/c

c. Capital redemption A/c

d. Redemption of share A/c

5. Share allotment is a ------ A/c.
a. Real A/c

b. Personal A/c

c. Impersonal A/c

d. None of the above

6. Now, a company can buy back more than ----- per cent of its shares.
a. 20%
b. 30%
c. 25%
d. 15%

7. Any premium payable on the redemption of preference shares must be from the ---- account
or from the divisible profits of the company.
a. Security premium

b. Discount on issue of shares
c. Dividend
d. Capital redemption

8. Fresh issue of shares for redemption can be made at par, premium or -----
a. Face increase


b. Discount
c. Premium

9. After realizing all the investments in the sinking fund investment account is transferred to----

-

a. Profit & loss A/c
b. Debentures A/c
c. Capital reserve
d. Sinking fund A/c


10. Premium on redemption of debenture a/c is in the nature of:-
a. Personal A/c
b. Real A/c

c. Nominal A/c

d. Impersonal A/c

11. The following journal entry is passed in the books of Arun limited:-

7% debenture A/c Dr. 160000

Premium on redemption of debenture A/c Dr. 6000

To bank A/c 147200

To profit on cancellation of debenture A/c 18800

a. Par

b. Rs. 92
c. Rs. 90
d. Rs. 95

12. The books of ABC Limited showed the following journal entry:-
Bank A/c Dr. 96000

Loss on issue of debenture A/c Dr. 10000
To 10% debenture

100000
To premium on redemption

6000

Debentures have been issued at a discount:-
a. 10%


b. 5%
c. 6%
d. 4%


13. Own debenture amount will appear on the ---- side of the balance sheet.
a. Liability
b. Asset

c. Under the balance sheet
d. Profit & loss A/c

14. Debenture holders are entitled to receive---- at fixed rate.
a. Interest
b. Dividend
c. Bonus
d. All of the above

15. The company can ----- its own debentures.
a. Purchase
b. Sell

c. Resell

d. Mortgage

16. Loss on the issue of debenture account is ---- asset.
a. Current
b. Fictitious
c. Fixed
d. Tangible

17. Provision of funds must be made, if debentures are to be redeemed by ---- method.


a. Debenture redemption fund
b. Sinking fund

c. Sinking fund investment
d. All of the above


18. Own debentures purchased by the company will be shown on the ---- side of the balance
sheet.
a. Liabilities

b. Profit & loss A/c
c. Assets
d. Purchase book

19. While redeeming the debenture the debenture account should be debited at its ---- value.
a. Annual value
b. Market value
c. Net value
d. Face value

20. The balance of debenture redemption reserve account is transferred to ---- after all the
debentures are redeemed.
a. General reserve
b. Secured loan
c. Unsecured loan
d. Capital reserve

21. From the cum-interest price the debenture can be calculated by ------ the interest of the
expired period.
a. Adding

b. Multiplying
c. Subtracting


d. Dividing

22. Loss on sale of sinking fund investment is to be debited to ---- account.
a. Sinking fund account
b. Sinking fund investment account


c. Capital reserve account

d. Capital redemption fund account

23. Public Limited Companies cannot issue:-
a. Equity shares
b. Preference shares
c. Deferred shares
d. Bonus shares

24. The minimum share application money is:-
a. Rs. 2 per share
b. 5% of the nominal value of shares
c. 50% of the nominal value of shares
d. 20% of the nominal value of shares

25. Right shares mean the shares which are:-
a. Issue to the directors of the company
b. First offered to the debenture holder

c. First offered to the existing share holders
d. Issued by a newly formed company

26. Equity share holders are:-
a. Creditors
b. Owners

c. Customers


d. Suppliers

27. Subject to the permission allowed, the maximum allowable discount on equity shares is:-
a. 10%
b. 5%


c. 15%

d. 20%

28. Premium on issue of shares can be used for:-
a. Distribution of profits
b. Issue of bonus shares

c. Paying the remuneration to the directors
d. Issue of debentures

29. The balance of the share forfeited account after the reissue of forfeited shares is transferred
to:-
a. General reserve

b. Capital redemption reserve
c. Capital reserve
d. Sinking fund

30. Balance of share forfeiture account is shown in the balance sheet under the item:-
a. Current liabilities and provisions
b. Reserves and surplus
c. Share capital account
d. Unsecured loans

31. If a share of Rs. 10 on which Rs. 6 has been paid, is forfeited it can be re issued at a
maximum price of:-
a. Rs. 6 per share


b. Rs. 4 per share
c. Rs. 10 per share
d. Rs. 3 per share

32. Debentures represents:-


a. The investment of equity share holders
b. Directors share in business
c. Long term liability of a business
d. Asset of a company

33. Debentures issued as collateral security for Rs. 100000 should be debited to:-
a. Debenture suspense A/c
b. Bank account

c. Debenture account
d. Capital account

34. The balance of sinking fund account after redemption of debentures is transferred to:-
a. Profit & loss account
b. General reserve account
c. Debenture account
d. Sinking fund investment account

35. The balance of sinking fund investment account after realization of investments is
transferred to:-
a. Profit & loss account
b. Debenture account
c. Sinking fund account

d. Sinking fund investment account

36. Profit on cancellation of own debentures is transferred to:-


a. Capital reserve
b. Dividend equalization fund
c. Profit & loss account


37. If debentures of the face value of Rs. 50000 are issued at a discount of 10% for net assets
worth Rs. 40000 the balance of Rs. 5000 will be debited to:-
a. Goodwill account

b. Capital reserve account
c. Profit & loss account

38. A floating charge generally cover all the :-

a. Fixed assets of the company including future one

b. Current assets of the company including future one
c. All the assets of the company including future one
d. Fictitious assets of the company including future one

39. Pricing of public issue is determined by:-
a. The SEBI
b. The company in consultation with stock exchange and SEBI

c. The company in consultation with lead manager
d. All of the above

40. Book building is a method of:-

a. Price estimation for issue of shares to the public
b. Allotment of shares
c. Redemption of shares

d. Redemption of debentures

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