Internal Reconstruction Question Bank [BCOM 2nd Sem CBCS Pattern 2023]

Internal Reconstruction Question Bank

Capital Reduction Question Bank

[BCOM 2nd Sem CBCS Pattern 2023]

In this post you will get Internal Reconstruction Question Bank for BCOM 2nd SEM CBCS Pattern. In this Question Bank we will cover Questions asked in the following universities exam:

– Dibrugarh University 

– Gauhati University

– Assam University

internal reconstruction question bank

1. (2018) Following are the Ledger balances of XYZ Co. Ltd. As on 31st March, 2018:

Debit balances

Rs.

Credit balances

Rs.

Share Capital: Fully Paid 10000 Equity shares of Rs. 10 each

500, 9% Preference Shares of Rs. 100 each

Sundry Creditors

1,00,000

50,000

25,000

Land and Building

Plant and Machinery

Stock-in-trade

Sundry Debtors

Cash at Bank

Profit and Loss Account (Dr.)

60,000

25,000

25,000

14,500

500

50,000

1,75,000

1,75,000

Due to heavy losses, the following scheme of reconstruction is agreed by the company:

1)    To reduce the value of each equity share to Rs. 4

2)    To convert existing preference shares into 400, 12% Preference Shares of Rs. 100 each.

3)    To write down the value of stock by Rs. 5,000.

4)    After writing-off the debit balance of Profit and Loss Account, any balance left was to be used in raising a reserve against sundry debtors.

Give necessary Journal Entries in the books of the company to record the above adjustments and prepare the Revised Balance Sheet after reduction.

2. (2017) P Ltd. had the following Balance Sheet as on 31st March, 2015:

Liabilities

Rs.

Assets

Rs.

Share Capital:

8000 Equity Shares of Rs. 100 each fully paid

7½% Debentures

Profit prior to incorporation

Sundry Creditors

8,00,000

3,00,000

10,000

2,00,000

Land & Building

Plant & Machinery

Goodwill

Patents

Cash in Hand

Stock

Debtors

Profit & Loss A/c

Preliminary Expenses

4,00,000

3,50,000

1,00,000

20,000

10,000

90,000

1,00,000

1,90,000

50,000

13,10,000

13,10,000

The following scheme of reconstruction was adopted:

a)      Each share was to be reduced to a share of Rs. 50 each.

b)      Each shareholder was to subscribe for half the number of shares already held by him and pay immediately in cash for the new shares acquired.

c)       All fictitious assets including goodwill and patents were to be eliminated.

d)      A provision of 5% on debtors in respect of doubtful debts to be created.

e)      Machinery was to be written down by Rs. 40,000.

Give Journal Entries to record the above and show the Balance Sheet after the scheme is carried through.    6+5=11

3. (2016) The ledger balances of HiFi Ltd. as on 31st March, 2016 are as follows:

Cr. Balances

Amount

Dr. Balances

Amount

Share Capital:

Authorized Capital:

50000 Preference shares of Rs. 10 each

50000 Equity shares of Rs. 10 each

Issued and Paid-up:

25000 Preference shares of Rs. 10 each

25000 Equity shares of Rs. 10 each

Current Liabilities:

Sundry Creditors

Bank Overdraft

 

 

5,00,000

5,00,000

 10,00,000

2,50,000

2,50,000

40,000

36,000

Goodwill

Leasehold Premises

Plant and Machinery

Patents

Stock

Debtors

Cash

Surplus A/c (negative balance)

20,000

1,07,000

60,000

1,73,900

34,000

56,000

100

1,25,000

 

5,76,000

 

5,76,000

The company proved unsuccessful and resolutions were passed to carry out the following scheme of reconstruction by reduction of capital:

1)      That the Preference Shares be converted to an equal number of fully paid shares of Rs. 5 each.

2)      That the Equity shares be reduced to an equal number of fully paid shares of Rs. 2.50 each.

3)      That the amount so available be utilized towards wiping out losses and reduction of assets as follows:

Goodwill and Surplus A/c (negative balance) to be written off entirely; Rs. 27,000 to be written off from Leasehold Premises, Rs. 14,000 to be written off from Stock; Rs. 6,000 to be provided for Doubtful debts, 20% should be written off from Plant and Machinery and the balance be written off from patents.

Make Journal Entries in the books of the company and prepare Balance Sheet giving effect to the above scheme.

4. (2015) Ganapati Co. Ltd. had the following Ledger balances as on 31st March, 2015:

Cr. Balances

Rs.

Dr. Balances

Rs.

Issued and subscribed capital:

8000 shares of Rs. 100 each fully paid

800, 6% Debentures of Rs. 1,000 each

Bank Overdraft

Sundry Creditors

Bills Payable

8,00,000

8,00,000

2,40,000

3,00,000

1,00,000

Goodwill

Land and Buildings

Plant and Machinery

Stock

Sundry Debtors

Cash at Bank

Preliminary Expenses

Profit & Loss A/c (Dr.)

2,40,000

3,60,000

8,00,000

1,88,000

1,84,000

50,000

24,000

3,94,000

 

22,40,000

 

22,40,000

The following scheme of reconstruction was adopted:

a)      Without altering the number of shares in issued and subscribed capital, the face value and paid-up value of each share was to be reduced to Rs. 50.

b)      The existing debentures be converted into 400, 7 ½ % debentures of Rs. 1,000 each, fully paid.

c)       The assets be revalued as under:

Land and Building – Rs. 3,28,000

Plant and Machinery – Rs. 7,20,000

Stock – Rs. 1,78,000

Sundry Debtors subject to a Bad Debts provision of Rs. 20,000

d)      Goodwill, Preliminary Expenses and the debit balance of Profit & Loss A/c will be completely written off.

Give Journal Entries to implement the above scheme and prepare the Balance Sheet after the reconstruction scheme is carried through.           8+6=14

5. (2013) Kamrup Company Ltd had the following Balance Sheet as on 31st March, 2012:

Liabilities

Amount

Assets

Amount

Authorized Capital

5000 Shares of Rs. 100 each

Issued and Subscribed Capital:

2000 Shares of Rs 100 each

200, 6% debenture of Rs 1000 each

Sundry Creditors

Bills Payable

Bank Overdraft

 

5,00,000

 

2,00,000

2,00,000

75,000

25,000

60,000

Goodwill

Land & Building

Plant & Machinery

Stock

Sundry Debtors

Cash at Bank

Preliminary Expenses

Profit & Loss A/c (Dr)

60,000

90,000

2,00,000

47,000

46,000

12,500

6,000

98,500

 

5,60,000

 

5,60,000

The Following schemes of reconstruction were adopted:

(1) Without altering the number of shares in authorised, issued and subscribed capital, the face value and paid value of each shares was to be reduced to Rs. 50

(2) The existing debentures be converted into 100, 9 1/2% Debentures of Rs. 1,000 each

(3) The assets be revalued as under: Land and Building Rs. 82,000, Plant and Machinery Rs. 1,75,000, Stock Rs. 44,500, Sundry Debtors subject to a bad debt provision Rs.5,000

(4) Goodwill, preliminary expenses and the debit balance of Profit & Loss A/C are completely written off. Give Journal Entries to implement the above schemes of reconstruction and prepare the Balance Sheet.

6. (2011) The following was the Balance Sheet of XYZ Co. Ltd. before reconstruction:

Liabilities

Rs

Assets

Rs

Issued and Paid-up Capital:

12,000, 7% Preference Share of Rs 50 each

15000 Equity Shares of Rs 50 each

Loan

Sundry Creditors

Other Liabilities

6,00,000

7,50,000

5,73,000

2,07,000

35,000

Building

Plant

Trademarks and Goodwill

Stock

Debtors

Preliminary Expenses

Profit & Loss A/c

4,00,000

2,68,000

3,18,000

4,00,000

3,28,000

11,000

4,40,000

21,65,000

21,65,000

The company is now earning profit but is short of working capital and a scheme of reconstruction had been approved by both classes of shareholders and sanctioned by the court. The scheme is:

(a) The equity shareholders have agreed that their Rs 50 shares to be reduced to Rs 2.50 per share.

(b) They have also agreed to subscribe in cash for three new equity share of Rs 2.50 each for each share held by them.

(c) The preference shareholders have agreed to cancel the arrear of dividend and to accept four new 5% preferences shares of Rs 10 each for every preference share they held and each shareholder to buy six new equity shares of Rs 2.50 each fully paid for each preference share.

(d) Loan creditors of Rs 1, 50,000 have agreed to convert their loan into preference share of Rs 10 each and 12000 new equity shares of Rs 2.50 each.

(e) The directors have agreed to subscribe in cash for additional 40000 new equity shares of Rs 2.50 fully paid.

(f) Of the cash received by issue of new shares Rs 2, 00,000 is to be used to reduce the loan due by the company.

(g) The amount available is to be applied to write off preliminary expenses, Profit & Loss A/c debit balance and to write off plant and machinery by Rs 35,000. The balance is to be used to write off the value of trademarks and goodwill. Show the Journal Entries to put through the scheme and prepare the Balance sheet after reconstruction. 2005

7. Jeevan Jyoti Company Ltd. Hade the Following Balance Sheet on the 31st March, 2004

Liabilities

Rs.

Assets

Rs.

8000 Shares of Rs. 100 each fully paid up

7 ½ % Debentures

Profit prior to incorporation

Sundry Creditors

8,00,000

3,00,000

10,000

2,00,000

Land & Building

Plant & Machinery

Goodwill

Patents

Cash in Hand

Stock

Debtors

Profit and Loss A/c

Preliminary Exp.

4,00,000

3,50,000

1,00,000

20,000

10,000

90,000

1,00,000

1,90,000

50,000

 

13,10,000

 

13,10,000

The following scheme of reconstruction was adopted: –                                                               

a) Each share was to be reduced to a share of Rs. 50 each.

b) Each Shareholder was a subscribed for half the number of share shares already held by him and pay immediately in cash for the new shares acquired.

c) All fictitious assets including goodwill and patents were being eliminated.

d) A provision for 5% on debtors in respect of doubtful debts to be created.

e) Machinery was to be written down by Rs. 40000.

8. (2007) Evaluate Company Ltd. Had the following balance sheet as at 31st March 2006:

Liabilities

Rs

Assets

Rs.

Authorised Capital:

5000 Shares of Rs. 100 each

Issued at subscribed Capital

2000 Shares of Rs. 100 each Fully paid

200, 7 ½ Debentures of Rs 1000 each

Sundry Creditors

Bills Payable

Bank Overdraft

 

 

 

5,00,000

 

2,00,000

 2,00,000

75,0000

25,000

60,000

Goodwill

Land & Building

Plant & Machinery

Stock

Sundry Debtors

Preliminary Exp.

Profit & Loss A/C (Dr)

60,000

90,000

2,00,000

47,000

46,000

1,25,000

6,000

98,500

5,60,000

5,60,000

The following scheme of reconstruction was adopted:

1. Without altering the number of shares in authorized issued and subscribed Capital, the face value of paid up value of each share was to be reduced to Rs. 50.

2. The existing debentures be converted into 100, 8 ½ % debentures of Rs 1,000 each fully paid.

3. The assets are Revalued as under: Land & Building-82,000, Plant & Machinery- 18,0000; Stock-44,500; Sundry Debtors subject to Bad Debts Provision of Rs 5,000.

4. Goodwill, Preliminary Exp. and Debit balance of Profit & Loss A/c be completely written off.

Give journal entries to implement the above scheme and prepare the Balance Sheet after the reconstruction scheme is carried through.

PRACTICAL QUESTION BANK (FROM 2012 TO 2022)

ISSUE OF SHARES, RIGHT SHARES AND BONUS SHARES

REDEMPTION OF PREFERECE SHARES

ISSUE AND REDEMPTION OF DEBENTURES

FINAL ACCOUNTS OF COMPANIES

INTERNAL RECONSTRUCTION

AMALGAMATION AND EXTERNAL RECONSTRUCTION

ACCOUNTS OF BANKING COMPANIES

CASH FLOW STATEMENT

ACCOUNTS OF HOLDING COMPANIES

Important Theory Questions for 2023 BCOM Exams available here.

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