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IIPM
THE INDIAN INSTITUTE OF PLANNING AND MANAGEMENT Advanced Accounting Re-Examination Assignment
Paper Code: IIPM/FIN03/AA004 Max. Marks: 100 General Instructions: The Student should submit this assignment in his/her own handwritten (not in the typed format). The Student should submit this assignment within 2 days from the issue of the assignment. The student should attach this assignment paper with the answered papers. Write legibly and keep the length of the answer as per the weightage (in terms of marks) assigned to each question. DO NOT be unduly short or long in providing the relevant details. The student should only use the Rule sheet papers for answering the questions. Failure to comply with the above instructions would lead to rejection of assignment. Specific Instructions: There are Four Questions in this assignment. The student should answer all the questions along with their subparts. Marks are being assigned to each section of the question as well. Each Question carries equal marks (25 marks) unless specified explicitly.

Question-1(A) The Balance sheet of Bobby Ltd as at 31 March 2011 is as under: Marks] Liabilities 17500 Equity Shares of Rs 100 each fully paid 7000 10% Preference shares of Rs 100 each 15% Debentures Unsecured Loan Creditors Accrued interest on debentures Rs 17,50,000 7,00,000 7,00,000 3,50,000 5,25,000 1,05,000 41,30,000 Assets Patents Freehold Premises Machinery Stock Debtors Bank Profit & Loss A/c Rs 2,45,000 8,75,000 4,72,500 7,00,000 6,30,000 1,75,000 10,32,500 41,30,000

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The following scheme of reconstruction was passed and approved by the court:

2 (i)A new company Dreamy Ltd to be formed to takeover the entire business of Bobby Ltd. (ii)Dreamy Ltd to issue one equity share of Rs 100, Rs 60 paid up in exchange of every 2 shares in Bobby Ltd. to the shareholders who agree with the scheme. Shareholders who do no agree with the scheme, to be paid @ Rs 20 per share in cash. Such shareholders hold 1400 equity shares. (iii)Preference shareholders to get 15 11% Preference shares of Rs 10 each in exchange of 2 preference shares of Bobby Ltd. (iv)Liability in respect of 15% debenture and interest accrued thereon to be taken over and discharged directly by Dreamy Ltd by issue of equity shares of Rs 100 each fully paid up. (v)The creditors of Bobby Ltd will get from Dreamy Ltd 50% of their dues in cash and 25% in equity shares of Rs 100 each and the balance to be foregone by them. (vi)The freehold premises to be revalued at 20% more. The value of machinery to be reduced by 33-1/3% and that of debtors by 10%. The value of stock to be reduced to Rs 5,60,000. Patents have no value. (vii)The preliminary expenses amounted to Rs 17500. Open Realisation A/c in the books of Bobby Ltd and pass J.Es in the books of Dreamy Ltd. Question-1(B)[5Marks] A company issued 800,000 shares out of which 600,000 were underwritten by A,B,C And D in the ratio of 2:3:1:4. If applications were received for 550,000 shares, find out the liability of each underwriter in the following cases: (a)All applications were unmarked. (b)All applications were marked. (c)Applications for 60% shares were marked. Question.2[25Marks] The following is the Balance Sheet of Thomson Ltd. as on 31 March, 2011 Liabilities 72000 Equity shares of Rs 10 each General Reserve P&L a/c 12% Debentures Creditors Rs 7,20,000 96,000 41,600 3,20,000 2,54,880 Assets Building Plant & Machinery Furniture Patents Investments Debtors Stock Bank Rs

3,40,000 1,80,000 60,000 28,000 92,000 2,40,000 4,48,000 44,480 14,32,480 14,32,480 Thomson Ltd was absorbed by Johnson Ltd on the following terms and conditions: (i)Assume all liabilities and to acquire all assets except investments which were sold by Thomson Ltd at 90% of book value. (ii)Discharge the debentures of Thomson Ltd at a discount of 10% by the issue of 14% Debentures of Rs 100 each in Johnson Ltd. (iii)Patents were of no worth.

3 (iv)Issue of one equity share of Rs 10 in Johnson Ltd, issued at R 12 and a cash payment of Rs 3 for every share in Thomson Ltd. (v)Pay the cost of absorption Rs 4640. (vi)Thomson Ltd sold in the open market half of the shares received from Johnson Ltd at Rs 15 per share. Show the necessary ledger accounts in the books of Thomson ltd and the opening Journal Entries in the books of Johnson Ltd. Question .3(A)[18Marks] Progressive Ltd. makes a public issue of 1,00,000 equity shares of Rs. 10 each at 10%premium.The Board of directors of the company decides that amount per share will be payable as follows by the share holders.

On Application On Allotment Rs. 4 On 1st call

Rs. 3 (including premium) Rs. 4

One of the shareholder Anil holding 1000 shares does not pay the call money and hence in the meeting of the board of directors of the company, it was decided to forfeit his shares. These forfeited shares were reissued by the company as fully paid up @ Rs. 5 per share. You are required to pass necessary journal entries to give effect to above transactions of the company.

Question-3(B)[7Marks] Pass necessary journal entries for the following transactions of Y Ltd. (i) (ii) 50,000 equity shares of Rs. 100 each sub-divided into shares of Rs. 10 each. 2,50,000 preference shares of Rs. 10 each are consolidated in to shares of Rs. 100 each.

Question- 4(A)[10Marks] The share capital of the company consisted of 3,00,000 shares of Rs 20 each fully paid up. For the purpose of reconstruction it was decided to sub-divided shares of Rs 20 each into Shares of Rs.5 each. After that, members decide to surrender 3 out of 4 shares held for reorganization of the company. Pass Journal entries if: (a)The company decides to cancel the shares surrendered by the members.

4 (b)The company reissues 2/3 of the surrendered shares for settlement of liabilities of the book value of Rs 35,00,000. Out of the remaining 1/3 of the surrendered shares, 20% are reissued to public for Rs 2,40,000 and 80% are cancelled at a later stage. Question-4(B)[15Marks] The following is the summarized Balance Sheet of Ananda Ltd: Liabilities Rs Asset Rs Paid-up Share Capital Bank 90,000 50,000 Equity Shares of Rs Other assets 8,10,000 10 each fully paid 5,00,000 1000 10% Redeemable Preference shares of Rs 100 each fully called up 100000 Less: calls in arrear @ Rs 20 each 1000 99,000 Reserves & Surplus: Securities Premium 20,000 Profit & Loss A/c 60,000 General reserve 70,000 Current Liabilities: Creditors 1,51,000 Total liabilities 9,00,000 Total assets 9,00,000 The redeemable preference shares were redeemed on the following basis: (i)Further 4,500 equity shares were issued at a premium of 10%; (ii)Expenses for fresh issue of shares Rs 5,000; (iii)Of the 50 preference shares, holders of 40 shares paid the call money before the date of redemption. The balance 10 shares were forfeited for non-payment of calls before redemption. The forfeited shares were re-issued as fully paid on receipt of Rs 500 before redemption; (ivPreference shares were redeemed at a premium of 10% and securities premium account was utilised in full for this purpose. Show journal entries including those relating to cash and the summarized balance sheet after redemption. ..ALL THE BEST