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Davanagere University

The document outlines the 2nd Internal Test for Advanced Corporate Accounting at Davanagere University, specifically for IIIrd B Com students. It includes questions related to the reconstruction of two companies, Remo Company Ltd. and Chaitanya Ltd., requiring students to provide journal entries and prepare reconstructed balance sheets. Additionally, it asks for a definition of internal reconstruction and a legal provision regarding the reduction of share capital.

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Santhosh A M
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31 views1 page

Davanagere University

The document outlines the 2nd Internal Test for Advanced Corporate Accounting at Davanagere University, specifically for IIIrd B Com students. It includes questions related to the reconstruction of two companies, Remo Company Ltd. and Chaitanya Ltd., requiring students to provide journal entries and prepare reconstructed balance sheets. Additionally, it asks for a definition of internal reconstruction and a legal provision regarding the reduction of share capital.

Uploaded by

Santhosh A M
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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DAVANAGERE UNIVERSITY

H P P C GOVT. FIRST GRADE COLLEGE, CHALLAKERE


2nd Internal Test-2024
Sub: AdvancedCorporateAccounting - II
CLass: IIIrd B Com (VIth Semester)
Max. Marks: 20

A) Answer any Two of the following questions.


10X02=20
1. The Balance Sheet of Remo Company Ltd. on 31.12.2013 are as follows:
Liabilities Rs. Assets Rs.

Authorised Capital: Goodwill 70,000


6,000 share of Rs. 100 each 6,00,000 Buildings 80,000
Issued Capital: Plant 1,50,000
2,000 shares of Rs. 100 each fully paid up 2,00,000 Stock 50,000
200, 5% Debentures of Rs. 1,000 each 2,00,000 Debtors 43,000
Sundry Creditors -50,000 Cash 2,500
Bills payable 5,000 Preliminary
Bank overdraft 45,000 expenses 4,500
Profit and Loss
A/c. 1,00,000
5,00,000 5,00,000

The following scheme of Reconstruction was adopted :


1. The paid up value of each share to be reduced to Rs. 50.
2. 5% debentures to be converted into 100, 7.5% Debentures of Rs. 100 each.
3. Assets were revalued as under: Buildings Rs. 72,000, Plant Rs. 1,40,000, Stock Rs. 45,000, Debtors subject
to Reserve for bad debts Rs. 2,500.
4. Creditors agree to forego 4 th of the amount due to them in return for shares for the balance.
5. Goodwill and other fictitious assets to be written off entirely.
Give the necessary Journal Entries.
2. The Balance Sheet of Chaitanya Ltd. as on 31-12-2013 is as follows:
Liabilities Rs. Assets Rs.

Share Capital Goodwill 2,00,000


30,000 8% Preference shares Land 4,00,000
of Rs. 10 each 3,00,000 Machinery 2,50,000
1,00,000 Equity shares of Rs. 5,00,000 Tools 1,00,000
5 each Stock 1,00,000
14% Debentures 2,00,000 Debtors 65,000
Creditors 3,00,000 Cash 10,000
Profit and Loss A/c. 1,75,000
13,00,000 13,00,000

On this date, it was decided to reconstruct the Company and the following scheme of reconstruction was agreed
upon:
(1) The creditors to accept 14% debentures to the extent of half of their dues and the balance to be paid after six
months.
(2) The preference shares to be reduced to shares of Rs. 5 each.
(3) Equity shares to be reduced to shares of Re.1 each.
(4) The debit balance of Profit and Loss Account and goodwill to be written off.
(5) Land to be reduced by Rs. 79,000, Machinery by Rs. 40,000 and Tools by Rs. 48,000.
(6) R.B.D. to the extent of Rs. 8,000 is to be created.
Give Journal Entries, Prepare Reconstruction Account and the Reconstructed Balance Sheet.
3. What is Internal Reconstruction? Write a legal provision regarding reduction of share capital.

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