TYBCOM Sem 5 Financial Accounting Question Paper 2019
TYBCOM Sem 5 Financial Accounting Question Paper 2019

TYBCOM Sem 5 Financial Accounting Question Paper 2019

April 2019

[3 Hours]                                                                                                                                            [Total Marks 100]

N.B.
1) All questions are compulsory. Questions 2 to 6 have an internal choice
2) Figures to the right indicate full marks.
3) Use of simple calculators is allowed.
4) Working notes should form part of your answer.

Q1 A) State whether the following statements are True or False (Any 10) (10 Marks)

  1. In Fixed Assets Note, Opening Net Block = Opening Gross Block — Opening Depreciation.
  2. Shareholders’ Funds are always non-current Liabilities.
  3. Goodwill is classified as Fixed Asset under Schedule III of the Companies Act
  4. Security Premium can be transferred to Capital Reduction Account.
  5. A company can subdivide shares of large denomination into shares of smaller denomination.
  6. After buy back of equity shares, the debt-equity ratio should not exceed 2:1.
  7. Only fully paid-up equity shares can be bought back.
  8. Interest is calculated on Market Value of securities.
  9. Ex-Interest price Less Accrued interest = Cost of the investment.
  10. Corporate Social Responsibility policy to be undertaken by the company are specified in the Companies Act, 2013.
  11. The Professional Code of Ethics is voluntary for professional body members.
  12. Lowest degree of accountants’ ethical behaviour leads to creative accounting

Q1 B) Match the following Column A with Column B (any 10) (10 Marks)

COLUMN ACOLUMN B
Sundry CreditorsCompany is liquidated
Currents AssetsVariable Income Bearing Securities
Internal ReconstructionShares of ₹1 each converted into shares of ₹10 each
ConsolidationIs credited to Profit and Loss A/c
No Journal entry is requiredInvestment Accounting
Surrender of sharesFor cancelling un-issued shares
Equity sharesSource of Buy-Back
Profit on Sale of InvestmentsGiving up possession of shares
Accounting Standard 13Current Liabilities
One of the Objective of Buy-Back of Equity SharesRules expected to be followed by all
Free reserve + Securities PremiumAdvance recoverable in Cash
EthicsIncrease in the earning per share Company is not liquidated
 Rules that must be followed by all


Q2) Following Is the Summarized Balance Sheet of Tiger Ltd. As on 31-03-2018:(15 Marks)

LiabilitiesAssets
6,000 10% Cumulative Preference Shares of ₹100 each, fully paid up6,00,000Goodwill2,00,000
15,000 Equity Shares of ₹100 Each, fully paid up15,00,000Building19,50,000
Loan2,22,000Machinery70,000
Creditors7,50,000Debtors2,88,000
 Stock4,00,000
 Cash and Bank Balance1,26,000
 Profit & Loss A/c38,000
TOTAL30,72,000TOTAL30,72,000

Note: Preference Dividend was in arrears for 2 years.
The Board of Directors of the company decided to go for internal reconstruction, which was
approved by the court and carried on as follows:

  1. Paid up value of Equity Shares shall be reduced by 50%, face value being ₹ 100/-
  2. The Machinery was revalued at 90,000
  3. The value of stock was reduced by ₹ 1,00,000
  4. Building shall be written down to ₹ 15,50,000
  5. Creditors agreed to forego their claims by 10%
  6. Loan was fully settled for ₹ 2,00,000
  7. Intangible and fictitious assets to be written off.
  8. Cost of reconstruction expenses was paid ₹ 5,000.
  9. Arrears of preference dividend are to be settled by issuing 13% debentures of ₹ 100 each fully paid with regard to 80% of their dues and for the balance equity shares of ₹ 100 each ( ₹ 50 paid up) shall be issued.
  10. Preference share are to be converted into 13% debentures of ₹100 each fully paid with regard to 80% of their dues and for the balance equity shares of ₹100 each (₹50 paid up) shall be issued.
  11. All equity shareholders agreed to pay the balance amount, making shares fully paid

You are required to:
1) Pass Journal Entries in the books of the Company (Narration not required)
2) Prepare Capital Reduction A/c

OR


Q2) The Balance sheet of Aza Ltd as on 31st March 2018 (15 Marks)

LiabilitiesAssets
10,000   6% Preference Shares of ₹100 each, fully paid up10,00,000Goodwill1,60,000
80,000 Equity Shares of ₹10 each, fully paid up8,00,000Patents and Trade Marks40,000
Capital Reserve50,000Building4,30,000
5% Bank Loan4,00,000Plant & Machinery5,10,000
Accrued interest on Bank Loan60,000Furniture1,20,000
Creditors3,10,000Stock1,80,000
 Debtors1,50,000
Cash at Bank25,000
Cash in Hand5,000
Profit & Loss A/c8,00,000
Share Issue Expenses2,00,000
TOTAL26,20,000TOTAL26,20,000

Note: The Preference Dividend is in arrears for 4 years.
It was decided to reconstruct the Company for which the following Scheme was approved by the Court.

1.The 6% Preference Shares shall be converted into 7% Preference Share of ₹50 each, the number of preference shares remaining the same.

2.The Equity Shares shall be reduced to 3 each.

3.The amount of bank loan shall be converted into 6% Debentures at 75% of its bcok value.

4. 50% of the accrued interest on bank loan is waived off.

5. Arrears of Preference Dividend to be cancelled.

6. Intangible and fictitious assets are to be written of completely.

7.The Creditors agreed to waive 30% of their claims and to accept equity shares for 360, 000 in part settlement of their renewed claims.

8.The assets are to be revalued as follows:

Building                                            ₹5,00,000

Plant & Machinery                         ₹4,50,000        

Furniture & Fixtures                      ₹1,10,000

Stock                                                ₹1,60,000

Debtors                                           ₹1,40,000

Give journal entries (without narration) and show Notes to Accounts on Share Capital and Reserves & Surplus forming part of Balance Sheet after reconstruction.

Q3 A) The following are the balances extracted from the books of Nayantara Ltd. as on 31st March, 2018. (15 Marks)

ParticularsDebitParticularsCredit
Premises18,00,000Provision for Depreciation on
Furniture42,000-Premises36,000
Calls-in-Arrears45,000-Machinery99,000
Plant and Machinery19,80,000-Furniture7,200
Interim Dividend Paid2,25,00010% Bank Loan (Long Term)18,00,000
Sundry Debtors5,22,000Surplus A/c (Opening Balance)87,000
Goodwill2,28,000Profit for the year4,50,000
Cash and Bank Balance2,28,200Sundry Creditors3,00,000
Stock2,69,350Bills Payables2,28,000
 General Reserve1,50,000
 Provisions for Doubtful Debts24,900
 Equity Paid up Capital21,00,000
 Outstanding Salaries3,000
 Outstanding Directors Fees1,650
 Outstanding Debenture Interest54,000
Total53,40,750Total53,40,750

Additional Information:

1. The authorized capital of the Company was ₹36,00,000 in Equity Shares of ₹100 each.

2. The Company proposed a final dividend of 10% (excluding interim dividend paid)

3. 10% Bank Loan is secured against Premises.

4. Sundry Debtors include 350,000 due for more than six months.

5. Sundry Creditors include ₹60,000 for expenses.

You are required to prepare the Balance Sheet of Nayantara Ltd. in vertical format along with its notes to accounts as at 31st March, 2018.

Q3 B) The following is the trial balance of Payal Ltd. as on 31st March, 2018. You are required to prepare a statement of Profit and Loss in vertical format along with its notes to accounts as on that date.
(15 Marks)

Debit BalancesCredit Balances
Calls-in-Arrears10,00030,000 Equity Shares of ₹103,00,000
Building2,00,000each, fully called up1,20,000
Machinery1,50,000Surplus A/c (1-4-2017)1,50,000
Bills Receivables6,200Capital Redemption Reserve3,50,000
Investment50,000Sales400
Sundry Debtors79,800Commission800
Bad Debts500Provision for Bad Debts28,700
Printing and Stationery8,000Sundry Creditors10,000
Freight Outward6,000Bills Payables 
Wages11,200  
Salaries18,700  
Rent7,500  
Advertisement12,000  
Purchases80,000  
Cash at Bank1,00,000  
Cash in Hand70,000  
Opening Stock1,50,000  
TOTAL9,59,000TOTAL9,59,000

Additional Information:

1. Charge depreciation- Building at 5%, Machinery at 10%

2. Write off further ₹1,000 and make 5% provision for bad debts.

3. Bills Receivable included dishonored bill of ₹1,200 not yet recorded.

4. Goods destroyed by fire were 3,000, and insurance company accepted claim for ₹1,800 only.

5. Goods costing ₹1,500 sent on sale or return basis for which no intimation is received from

customer, have been treated as sales at a price of ₹2,000.

6. 20% dividend is proposed after transfer of ₹40,000 to tax provision.

7. Stock as on 31st March, 2018 was ₹1,20,000.


Q4 A) On 1/4/2017 Dr. Jude holds 2,000 10 % Debentures of ₹100 each in JR Ltd. at a cost of ₹2,50,000. During the year he purchased and sold debentures as follows: (15 Marks)

1.  On 1/6/2017, 1,000 10% Debentures of ₹100 each are purchased cum-interest at a cost of ₹1,06,000.

2. On 1/11/2017, 1,200 10% Debentures of ₹100 each are purchased ex-interest at a cost of ₹1,17,600.

3. On 30/11/2017, 1,000 10% Debentures of ₹100 each are sold ex-interest at a cost of ₹1,20,000.

4. On 1/12/2017, 1,500 10% Debentures of ₹100 each are sold cum-interest at a cost of ₹1,47,000.

5. On 1/2/2018, 500 10% Debentures of ₹100 each are purchased cum-interest at a cost of ₹51,000.

6. Interest is payable on 30th June and 31st December every year. The Books of accounts are closed on 31st March every year.

Prepare 10% Debenture Account in the books of Dr. Jude for the year ends on 31st March, 2018.

OR

Q4 B) Mss. Barkha gives you her following details of investment in equity shares of MP Ltd having face value of ₹10 each. (15 Marks)

DateParticularsNumbers of Equity SharesMarket Price
20/05/2017Purchased10015
25/06/2017Purchased20018
30/07/2017Purchased30020
16/08/2017Sold20025
18/09/2017Sold10023
10/10/2017Bonus issueOne share for three held12
22/02/2018Purchased20022

On 21st March, 2018 the Company announced right issue of equity shares in the ratio of 3:2. She purchased all right issues at market price of ₹24 per share.
Market Price of shares on 31st March, 2018 is ₹16.
Prepare Equity Shares Account in Ms. Barkha’s books for the year ended 31st March, 2018.

Q5 A) The summarized Balance Sheet of Bhagya Ltd. as on 31-03-2018 is as follows: (15 Marks)

Particulars
Share Capital 
Equity shares of ₹10 each fully paid50,00,000
Securities Premium5,00,000
General Reserve20,00,000
Profit & Loss Account25,00,000
12% Debentures40,00,000
Bank Loan10,00,000
Trade Payables40,00,000
Total1,90,00,000
Fixed Assets (Net Block)60,00,000
Long Term Investments50,00,000
Cash at Bank30,00,000
Other Current Assets50,00,000
Total1,90,00,000

The Company decided to buy back 1,00,000 equity shares of ₹10 each at an offer price of ₹30 per share. For this purpose, the company took the following steps:
i) Issued 3,000 8% Preference shares of ₹100 each at a premium of 5%.

ii) Sold 70% of Investments at a profit of 10%.

Pass Journal entries in the books (without narration) of the Company and prepare Notes to Accounts with respect to Share Capital, Reserves & Surplus and Cash & Cash Equivalent as on 31st March 2018.

(Do not prepare Balance Sheet)

OR

Q5 B) The following is the Balance Sheet of Suyash Ltd. as on 31-03-2018: (15 Marks)

LiabilitiesAssets
Share Capital: Fixed Assets: 
Authorised: Land and Building30,00,000
10,00,000 Equity shares of ₹10 each1,00,00,000Plant & Machinery30,00,000
Issued: Furniture22,00,000
8,00,000 Equity Shares of ₹10 each ₹8 paid up64,00,000Investments15,00,000
Reserves and Surplus: Current Assets, Loans & Advances 
Security Premium20,00,000Stock19,00,000
General Reserves15,00,000Accounts Receivables58,00,000
Profit and Loss Account45,00,000Bank40,00,000
Secured Loan:   
11% Debentures35,00,000  
Unsecured Loans:   
Bank Term Loan15,00,000  
Current Liabilities & Provisions:   
Accounts Payable20,00,000  
Total2,14,00,000Total2,14,00,000

The Company decides to buy back the maximum number of equity shares as may be permitted by law at a price of 15 per share. Find out maximum number of shares to be bought back and Pass journal entries (without narration) in the books of Suyash Ltd. and prepare Notes to Accounts with respect to Share Capital and Cash and Cash Equivalent as on 31st March 2018.
(Do not prepare Balance Sheet)

Q6 A) What is Ethical Behaviour? Explain the principles of Accounting Ethics? (10 Marks)
Q.6 B) Distinguish Between Internal and External Reconstructions? (10 Marks)

OR

Q6) Write Short Notes on (Any Four) (20 Marks)
1)  Conditions for buyback of shares
2) Meaning and types of Whistle Blowing
3) Need for reconstruction of a company
4) Outstanding Expenses and Prepaid Expenses
5) Ex and Cum-Interest Purchase Price
6) Laws and Ethics

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