1. P Ltd purchases a running business of Mr.

Q for the last years were

under--Particulars
Amount
st
31 December 2009
2,10,000
st
31 December 2010
2,20,000
st
31 December 2011
2,40,000
st
31 December 2012
2,50,000
Additional Information
a. Included in the profit of the year 2012, a non- recurring item of the
profit is Rs.25,000
b. Profit from the year ended December 2010 is affected by Loss by fire
of Rs. 20,000
c. The Closing stock for the tear 2011 was overvalued Rs. 10,000 and
undervalued in 2012.
d. Acquisition of this business will require replacement of a manager
who was getting a salary of Rs. 10,000 per month. The new manager
is to be employed at a monthly salary at Rs. 12,000
e. Additional insurance premium is required to be made Rs. 500 per
month.
Calculate the goodwill at 2 years purchase of average profit.
2. Following are the balance sheet of K Ltd and J ltd as on 31st March,2015
Particulars
K Ltd
J Ltd
Liabilities--Equity share capital of Rs. 10 each

4,00,000

1,80,000

General reserve

5,00,000

1,00,000

Profit and loss a/c

3,00,000

80,000

Debentures

3,50,000

Creditors

2,00,000

1,00,000

Bills payable

50,000

40,000

Total

18,00,000

5,00,000

Assets--Fixed Assets

7,00,000

3,00,000

Investments

5,00,000

Current assets

6,00,000

2,00,000

Total

1,80,000

5,00,000

The B.O.D. of K Ltd approved a takeover of J ltd as on 31st September,

2015. Find out the ratio of exchange of shares on the basis of the book value.
3. The following is the balance sheet of P Ltd and J ltd as on 31st
March,2015
Liabilities
Amount
Assets
amount
Share capital
10,000
Sundry assets
5,48,000
12% Preference shares 1,00,000
Primary expense
5,000
of Rs. 10 fully paid
30,000 equity shared
3,00,000
Discount on
2,000
of Rs.10 each (fully
debentures
paid)
General reserve
10,000
P/L A/c
35,000
Debenture redemption 20,000
fund
Depreciation fund
15,000
10% debentures
50,000
Sundry creditors
95,000
5,90,000
5,90,000
The debenture interest is owing for 6 months and preference dividend in
areas of 1 year. Assuming assets are worth their book value, show the
appropriate valuation of shares if--a. Preference shares are preferential as to capital and arrears are payable
in a winding up.
b. Preference share are preferential as to capital and arrears are not
payable.
4. Following figures for a period were called out from the books of XYZ ltd.
Particulars
Amount
Sales
24,80,000
Purchase of Raw materials
10,00,000
Agents commission
20,000
Consumables store
25,000
Packing material
10,000

Stationery
10,000
Audit fees
4,000
Staff, welfare expenses
1,58,000
Insurance
26,000
Rent, rates and taxes
16,000
Managing directors remuneration
84,000
Travelling expense
21,000
Fuel and oil
9,000
Electricity
5,000
Materials used for repairs to Plant
24,000
and machinery
Materials used for repairs of
10,000
building
Advertisement
25,000
Salaries and wages
6,30,000
Postage and courier
14,000
Contribution to provident fund
60,000
Directors sitting and travelling
40,000
expense
Subscription paid
2,000
Carriage
22,000
Interest on loan taken
18,000
Dividend to shareholders
30,000
Depreciation provided
55,000
Income tax
1,00,000
Retained earnings
1,25,000
Opening stock of raw material
85,000
Opening stock of finished goods
2,00,000
Closing stock of raw material
1,08,000
closing stock of finished goods
2,40,000
From the above, you are required to prepare a statement detailing the
sources and disposal of added value. Thus your statement have an access
of the chairman of the company, in the annual general meeting that 75%
of the added value is accounted by employees cost?
5. N Ltd is contemplating or considering conversion of 8% convertible
debentures of Rs. 10,000 each. At present, it has 500 such debentures
outstanding. The market price of the debentures is Rs. 1080. The
debentures indenture provides that 1 debenture can be converted for 10
shares. The P/E ratio before redemption is 20:1 and the anticipated P/E
after redemption is 25:1. The no. of shares outstanding prior to
redemption was 10,000. Earning before interest and taxes amounts to Rs.

2,00,000. The company is in 50% tax bracket. Should the company

convert its debentures into shares?
6. Solve all three :
a. What is Simple Interest & amount of Rs.8,000 for 4 yrs at 12% per
annum?
b. Find out compounded interest on Rs. 6,000 for 3yrs at 9%
compounded annually.
c. Ascertain the present value of an amount of Rs.8000 deposited now in
a commercial bank for a period of 6yrs at 12% rate of interest.
7. Following are the balance sheet of A Ltd and B ltd as on 31st March,2015
Particulars
A Ltd
B Ltd
Liabilities--Equity share capital of Rs. 10 each

4,00,000

1,80,000

General reserve

5,00,000

1,00,000

Profit and loss a/c

3,00,000

80,000

Debentures

3,50,000

Creditors

2,00,000

1,00,000

Bills payable

50,000

40,000

Total

18,00,000

5,00,000

Fixed Assets

7,00,000

3,00,000

Investments

5,00,000

Current assets

6,00,000

2,00,000

Total

1,80,000

5,00,000

Assets---

The B.O.D. of A Ltd approved a takeover of B ltd as on 31st September,

2015. Find out the ratio of exchange of shares on the basis of the book value.

8. Following figures for a period were called out from the books of XYZ ltd.
Particulars
Amount
Sales
24,80,000
Purchase of Raw materials
10,00,000
Agents commission
20,000
Consumables store
25,000
Packing material
10,000
Stationery
10,000
Audit fees
4,000
Staff, welfare expenses
1,58,000
Insurance
26,000
Rent, rates and taxes
16,000
Managing directors remuneration
84,000
Travelling expense
21,000
Fuel and oil
9,000
Electricity
5,000
Materials used for repairs to Plant
24,000
and machinery
Materials used for repairs of
10,000
building
Advertisement
25,000
Salaries and wages
6,30,000
Postage and courier
14,000
Contribution to provident fund
60,000
Directors sitting and travelling
40,000
expense
Subscription paid
2,000
Carriage
22,000
Interest on loan taken
18,000
Dividend to shareholders
30,000
Depreciation provided
55,000
Income tax
1,00,000
Retained earnings
1,25,000
Opening stock of raw material
85,000
Opening stock of finished goods
2,00,000
Closing stock of raw material
1,08,000
closing stock of finished goods
2,40,000
From the above, you are required to prepare a statement detailing the
sources and disposal of added value. Thus your statement have an access
of the chairman of the company, in the annual general meeting that 75%
of the added value is accounted by employees cost?

9. Mr. A died on 20th December, 2012. The balance sheet of his business on
31st March, 2012 is as underLiabilities
Amt
Asset
Amt
Capital
7,50,000 Buildings
5,00,000
Trade Creditors
3,75,000 Furniture
5,000
Income tax payable
1,00,000 Motor vehicle
47,500
Stock in trade
1,75,000
Sundry debtors
3,47,500
Cash
1,50,000

12,25,000
12,25,000
st
The Net Profit of the business for the next 5 years ended 31 march,
2012 were Rs. 3,87,500 , Rs. 4,66,700 , Rs. 4,64,800 , Rs. 5,61,200 , Rs.
5,21,200 .
Mr. A was actively engaged in the business but didnt draw salary. The
debt due to the business are all good and on a revaluation, the value of the
Fixed Assets are as followsBuilding
7,50,000
Furniture
7,500
Motor vehicle
1,00,000
Assuming the management remuneration for the services of the proprietor
to be Rs. 5,000 per month and 12 % is the fair return on investment.
Calculate the amount of goodwill by capitalization of super profit.
10.
Particulars
Equity capital
Long term debt at 14%

Alternate 1
Alternate 2
750
250
250
750
1,000
1,000
The firms corporate tax rate is 40%. It maintains a dividend of 18%
of equity share capital.
Calculate---The firms cost of capital.
11.Solve all three :
a. Mr. X is depositing Rs.2000 in a recurring bank deposit which pays
9% per annum compoundable interest. How much amount Mr.X
will get at the end of the 5th year.

b. The nominal rate of interest is 12% & rate of inflation is 5%. What
is the real rate of interest?
c. 14% undated bonds of Rs.100 are quoted at Rs.80. find the flat
yield.
12.A ltd has issued 10,000 equity shares of Rs.10 each. The current Market
Price per share is Rs. 30. The company has planned to make a rights issue
of 1 new equity share at a price of Rs.20 for every 4 shares held. You are
required to
i. Calculate the theoretical post rights price per share.
ii. Calculate the theoretical value of rights alone.
iii.Show the effects of the right issue on the wealth of the
Shareholders who has 1000 shares assuming he sells the entire
rights.
iv. Show the effect if the same Shareholder does not take any action &
ignores the issue.
13.The following is the balance sheet of P Ltd and J ltd as on 31st
March,2015
Liabilities
Amount
Assets
amount
Share capital
10,000
Sundry assets
5,48,000
12% Preference shares 1,00,000
Primary expense
5,000
of Rs. 10 fully paid
30,000 equity shared
3,00,000
Discount on
2,000
of Rs.10 each (fully
debentures
paid)
General reserve
10,000
P/L A/c
35,000
Debenture redemption 20,000
fund
Depreciation fund
15,000
10% debentures
50,000
Sundry creditors
95,000
5,90,000
5,90,000
The debenture interest is owing for 6 months and preference dividend in
areas of 1 year. Assuming assets are worth their book value, show the
appropriate valuation of shares if--a. Preference shares are preferential as to capital and arrears are
payable in a winding up.
b. Preference share are preferential as to capital and arrears are not
payable.

14.The following is the Balance sheet of R ltd as on 31st March, 2012.

Particulars
Rs.
Liabilities-9% Preference Shares of Rs. 100 each
2,50,000
Equity share capital ( share of 10 each )
5,00,000
General Reserves
4,00,000
P&L appropriation account
1,50,000
9% Debentures
2,00,000
Provision for Tax
50,000
Accounts Payable
1,75,000
Balancing Figure
17,25,000
Assets:Goodwill
Net blocks
6% Government Security
Stock
Debtors
Cash & Bank Balance
Primary Expenses
Discount on issue of debentures
Balancing Figure

50,000
9,00,000
2,00,000
2,70,000
1,95,000
35,000
55,000
20,000
17,25,000

i.
Net Blocks are considered worth Rs.12 lacs
ii.
Average profits of the company is estimated to be Rs. 1,50,000
iii. The Normal rate of return of the industry is 10%
Calculate the value of goodwill by
i. Capitalization of average profit
ii. Capitalization of super profit
15.Following are the balance sheet of K Ltd and J ltd as on 31st March,2015
Particulars
K Ltd
J Ltd
Liabilities--Equity share capital of Rs. 10 each

4,00,000

1,80,000

General reserve

5,00,000

1,00,000

Profit and loss a/c

3,00,000

80,000

Debentures

3,50,000

Creditors

2,00,000

1,00,000

Bills payable

50,000

40,000

Total

18,00,000

5,00,000

Fixed Assets

7,00,000

3,00,000

Investments

5,00,000

Current assets

6,00,000

2,00,000

Total

1,80,000

5,00,000

Assets---

The B.O.D. of K Ltd approved a takeover of J ltd as on 31st September,

2015. Find out the ratio of exchange of shares on the basis of the book value.
16.The following are the balances in the account statement of value for
money ltd for the year ended 31st march, 2015.
Particulars
Rs. In lacs
Turnover
2,300
Plant and machinery (net)
1,080
Loss on sale of machinery
75
Depreciation on plant and
200
machinery
Dividend to ordinary shareholders
146
Debtors
195
Creditors
127
Total stock of all materials, work in
progress and finished goods----Opening stock
160
Closing stock
200
Raw materials purchased
Cash at bank
Printing and stationery
Auditors remuneration
Retained profits(opening balance)

675
98
22
28
994

Retained earnings for the year

288
Rent rates and taxes
165
Other expenses
85
Ordinary shares capital issued
1500
Interest on borrowings
40
Income tax for the year
276
Wages and salary
327
Employees state insurance
35
Provident fund contribution
28
Prepare a value added statement for the company for 2004-2005 together
with ratios that would be of interest to the employees of the company
who are 95.
17.
Particulars
Equity capital
Long term debt at 14%

Alternate 1
Alternate 2
750
250
250
750
1,000
1,000
The firms corporate tax rate is 40%. It maintains a dividend of 18%
of equity share capital.
Calculate-The firms cost of capital.
18.Solve any three :
a. Mr.X is depositing Rs.2000 in a recurring bank deposit which pays
9% per annum compoundable interest. How much amount Mr.X will
get at the end of the 5th year.
b. Mr. Kulkarni has borrowed a long of Rs.5 lakh to construct his house,
which is repayable in 12 equal annual installments. The first being
paid at the end of 1st year. The rate of interest chargeable on this loan
is 4% per annum compounded. How much of equal annual installment
payable to amortize the same loan.
c. The long term guilds issued by Government with a Face Value of Rs.
100 & coupon rate at 10%. Calculate the resale value of guilds in the
following situation.
i. If market normal rate rises to 15%
ii. If market normal rate falls to 7%
d. Suppose 12% convectional bonds, redeemable at par in 2015 were
quoted at Rs.84 in 2010. Find flat yield. In addition, the investor will
make a capital gain of Rs. 16 over 6 yrs. Since the bond was
redeemable for Rs.100 in 2015. Find the annual yield & redemption
yield.