ORION ACADEMY

Class Test – TYBCOM – 2018-19 Marks : 30

Note: All questions are compulsory

Q. 1. Following is the Balance Sheet of Kavya Ltd. as on 31-3-2012:
Liabilities Rs. Assets Rs.
Shares Capital: Fixed Assets 10,20,000
80,000 Equity Shares of Rs.10 each 8,00,000 Bank Balance 6,20,000
4,000 Preference Shares of Rs.100 each 4 ,00,000
Profit and Loss Account 80,000
Debentures 1,60,000
Creditors 2,00,000
Total 16,40,000 Total 16,40,000

The company wants to buy back 20% of its equity capital at 10% premium. Not having
sufficient profits to buy back, the company issued 1,200 Preference Shares of Rs.100 each at
10% premium payable as Rs.20 on application and the balance on allotment. These shares were
duly taken up and company purchased the equity shares immediately, sufficient profits were
used to supplement the new issue.
Pass the necessary Journal Entries.

Q.2. The summarized Balance Sheet of Shreeram Ltd. as on 31st March 2017 is as follows:
PARTICULARS Rs.
Share Capital
3,00,000 Equity Shares of Rs. 10 each fully paid up 30,00,000
Reserves and Surplus
Securities Premium 2,00,000
Profit and Loss Account 8,00,000
Long Term Borrowings
10% Debentures 14,00,000
Current Liabilities
Creditors 4,00,000
TOTAL 58,00,000
ASSETS:
Fixed Assets 28,00,000
Investments 10,00,000
Current Asset 20,00,000
TOTAL 58,00,000

Ascertain the maximum number of shares the company can buy back at a price of Rs. 40 per
share.
Assuming that the buy back is carried out, you are required to:
a. Record the journal entries in the books of Shreeram Ltd.
 b. Prepare notes to accounts of share capital and reserves and surplus as they would appear in
notes to accounts forming part of the balance sheet of Shreeram Ltd. as on 31st March 2017.
(Do not prepare Balance Sheet)

Q. 3. The Balance Sheet of X Ltd. as on 31st March, 2016 was as follows:

Liabilities Rs. Assets Rs.
2,00,000 Equity Shares of Rs. Land and building 10,00,000
10 each 20 00,000 Plant and machinery 10,00,000
Security Premium 2,50,000 Furniture 1,00,000
General Reserves 3,00,000 Investments 2,00,000
Profit & Loss Account 3,00,000 Stock 1,70,000
Creditors 3,00,000 Debtors 3,80,000
Bank balance 3,00,000
31,50,000 31,50,000

The company decided to buy back 20% of its equity shares out of profits. All the legal
formalities were duly completed. The company sold its Investments for Rs.205,000 and issued
500 8% Debentures of Rs. 100 each and received the amount in full. After the buy back, the
company issued bonus shares to equity shareholder in the ratio of 1 bonus share for every 2
shares held using the least amount of profit and loss account.
Pass journal entries and prepare the balance sheet.