The Alfa Mfg. Company Ltd. was registered with a nominal capital of Rs. 6 Lakhs in Equity shares of Rs. 10 each. The following is the list of balances extracted from its books on 31.12.2017: Particulars Amt. Particulars Amt. Wages 84,865 Share capital 400,000 Calls-in-arrears 7,500 6% Debentures 300,000 Premises 300,000 P & L A/c (Cr.) 14,500 Plant & Machinery 330,000 Bills payable 38,000 Interim Dividend 37,500 Creditors 50,000 (01.08.2017) Stock (01.01.2017) 75,000 Sales 415,000 Furniture 7,200 General reserve 25,000 Debtors 87,000 Bad debts reserve 3,500 Goodwill 25,000 (01.01.2017) Cash in hand 750 Cash at bank 39,900 Purchases 185,000 Preliminary expenses 5,000 General expenses 16,835 Freight 13,115 Salaries 14,500 Directors fees 5,725 Bad-debts 2,110 Debenture Interest paid 9,000 12,46,000 12,46,000 Prepare Final Accounts in Vertical Form after making following adjustments: 1) Depreciate Plant & Machinery by 10%. 2) Write off Rs. 500 from Preliminary expenses. 3) Provide half year’s debenture interest due. 4) Leave bad and doubtful debts reserve at 5% on debtors. 5) Stock on 31.12.17 was Rs. 95,000.
What is Cash Flow Statement? Explain its usefulness. Also Distinguish Cash Flow Statement and Fund Flow Statement.
[7 marks]Write a short note on Receipts & Payments account. Differentiate Receipts & payments account and income & expenditure account. OR1
[7 marks]The following is the receipts and payments account of Delhi Football Association for the first year ending on 31.12.2017: Receipts Rs. Payments Rs. To Donations 50,000 By Pavilion Offices 40,000 To Reserve Fund (Life 4,000 By Expenses in 900 membership fees and Entry connection with matches fees) To Receipts from football 8,000 By Furniture 2,100 matches To Revenue Receipts: By Investment 16,000 Subscriptions 5,200 By revenue Payments: Locker Rents 50 Salaries 1,800 Interest on Securities 240 Wages 600 sundries 350 Insurance 350 Telephone 250 Electricity 110 Sundry expenses 210 By Balance in hand 5,520 67,840 67,840 Additional Information:
[7 marks]Subscriptions outstanding for 2017 are Rs. 250.
[ marks]Salaries unpaid for 2017 are Rs. 170.
[ marks]Wages unpaid for 2017 are Rs. 90.
[ marks]Outstanding bills for sundry expenses are Rs. 40.
[ marks]Donations received have to be capitalized. You are required to prepare Income & Expenditure account for the year ended on 31.12.2017 and the balance sheet of the Association as on 31.12.2017.
[ marks]The following is the balance sheet of RBD Ltd. as on 31.03.2018: Liabilities Rs. Assets Rs. Share Capital: Goodwill 125,000 200,000 Equity Shares 20,00,000 Patents 22,500 of Rs. 10 each 7,500, 10% Preference 750,000 Land & Buildings 13,50,000 shares of Rs. 100 each General Reserve 375,000 Other Fixed Assets 16,50,000 Profit & loss A/c 150,000 Plant & Machinery 187,500 12% Debentures 625,000 Investments: Creditors 150,000 Shares in Subsidiary 75,000 Co. Bills payable 100,000 10% Debentures of LB 225,000 Ltd. (interest taxable) Provident fund 25,000 Debtors 262,500 Stock 200,000 Prepaid expenses 5,000 Cash & Bank Balance 72,500 41,75,000 41,75,0002 Additional Information: 1) The present market value of land & building and other fixed assets are Rs. 17,22,500 and Rs. 17,50,000 respectively. 2) The patents are now useless. 3) The company’s average profit before tax is Rs. 900,000. The tax rate is 50%. 4) The expected rate of return on capital employed in this type of business is 10%. Compute the value of goodwill of the company on the basis of three years purchase of its super profit.
[7 marks]Why do we need to value the shares? Explain its importance with factors affecting value of shares.
[7 marks]Define goodwill. Explain its main characteristics with factors affecting value of goodwill.
[7 marks]The following is the balance sheet of D Ltd: Liabilities Rs. Assets Rs. Equity shares of Rs. 800,000 Goodwill 50,000 100 each 3000, 10% pref. Shares 300,000 Land & building 600,000 of Rs. 100 each (-) Dep. 60,000 540,000 Reserves & surplus 150,000 Plant & machine 760,000 (-) Dep. 100,000 660,000 Profit & Loss A/c 60,000 Other Fixed asset100,000 75,000 (-) Dep. 25,000 13% Debentures 250,000 Investments: Creditors 70,000 Shares of subsidiary co. 30,000 Bank Overdraft 30,000 15% Debentures of J Ltd. (F.V. Rs. 85,000 90,000 interest is taxable) Bills payable 10,000 Stock 80,000 Debtors 110,000 (-) Bad debt Res. 5,000 105,000 Cash & Bank Balance 31,000 Preliminary expenses 9,000 16,70,000 16,70,000 Additional information : 1) The value of land & building after depreciation has appreciated by Rs. 149,000. 2) The present market value of plant & machinery is Rs. 700,000. 3) The goodwill (new value) of the company is Rs. 80,000. 4) The E.R.R. on capital employed is 10%. From the above particulars, ascertain the intrinsic value of equity shares.
CMU Ltd. Invited applications for issuing 80,000 Equity shares of Rs. 10 each at a premium of Rs. 40 per share. The amount was payable as under: On Application Rs. 35 per share (including Rs. 30 Premium) On Allotment Rs. 8 per share (including Rs. 4 Premium) On First & Final call – Balance Applications received for 77,000 shares. Shares were allotted to all the applicants. Mr. Ato whom 7,000 shares were allotted failed to pay the allotment money. His shares were forfeited immediately after allotment. Afterwards the first and final call was made. Mr. Bthe holder of 500 shares failed to pay the first and final call. His shares were also forfeited.3 Out of the forfeited shares 1,000 shares were re-issued at Rs. 50 per share fully paid up. Re-issued shares included all the shares of Mr. B. Pass necessary journal entries.
[7 marks]Define Debenture. Explain the various classes of Debenture. Also differentiate Share and Debenture.
[7 marks](I) On 1-4-2017 P Ltd. Issued 6,000, 11% Debentures of Rs. 100 each at a discount of 5%. All the debentures are to be redeemed after 6 years as on 31-3-2023 at a premium of 10%. Pass the necessary journal entries in the books of the company. (II) ABC Ltd. Issued 10,000, 10% convertible debentures of Rs. 100 each at par as on April 1, 2013. All the debentures will be converted into shares after 5 years and for this 1 equity share of Rs. 10 each will be issued at a premium of 25% against each debenture. As per the terms, all the debentures are converted into shares as on April 1, 2018. Write necessary journal entries.
[7 marks]Write a short note on Buyback of Shares.
[7 marks]From the following Balance Sheet of CMU Ltd. on 31st December 2016 and 2017, you are required to prepare: (1) Statement of Changes in Working Capital; and (2) Funds Flow Statement. Liabilities 2016 2017 Assets 2016 2017 Share Capital 1,00,000 1,10,000 Building 40,000 38,000 General 14,000 18,000 Plant & Mach. 37,000 36,000 Reserve P & L A/c 16,000 13,000 Investment 10,000 21,000 Creditors 8,000 5,400 Stock 30,000 23,400 B/P 1,200 800 B/R 2,000 3,200 Prov. For Tax 16,000 18,000 Debtors 18,000 19,000 Prov. For Cash at bank 6,600 15,200 Doubtful 400 600 Debts Preliminary 12,000 10,000 Exp. 1,55,600 1,65,800 1,55,600 1,65,800 Additional Information : (I) Depreciation charged on plant was Rs. 4,000. (II) Provision for taxation Rs. 19,000 was made during the year. (III) Interim dividend of Rs. 8,000 was paid during the year. (IV) Apiece of machinery was sold for Rs. 8,000 during the year 2017. It had costed Rs. 12,000, depreciation of Rs. 7,000 has been provided on it.
[14 marks]The following are the summaries of the balance sheets of JD limited company as on 31st March: Liabilities 2016 2017 Assets 2016 2017 Share Capital 2,00,000 2,60,000 Cash at 2,500 2,700 Bank Sundry 39,500 41,135 Debtors 85,175 72,625 Creditors Bills Payable 33,780 11,525 Advances 2,315 735 Bank Overdraft 59,510 - Stock 1,11,040 97,370 Prov. For tax 40,000 50,000 Land & 1,48,500 1,44,250 Building Reserves 50,000 50,000 Plant & 1,12,950 1,16,200 Machinery P & L A/c 39,690 41,220 Goodwill - 20,000 4,62,480 4,53,880 4,62,480 4,53,880 Additional Information :4 (I) During the year ended on 31-3-2017, an additional dividend of Rs. 26,000 was paid. (II) The assets of another company were purchased for Rs. 60,000 payable in fully paid shares of the company. These assets consisted of stock Rs. 21,640, machinery of Rs. 18,360 and goodwill of Rs. 20,000. In addition, sundry purchases of plants were made of Rs. 5,650. (III) Income tax paid during the year was Rs. 25,000. (IV) The net profit of the year before tax was Rs. 62,530. Prepare a cash-flow Statement by Indirect method.
[14 marks]