Accounts -2000-Set III

PART ‘A’ (Accounting III)

Q2) What are the alternatives available to a company for the allotment of debentures when there is over-subscription of debentures? (Marks 3)
Ans2) In case of over-subscription of shares :
(i) The company may reject same applications, i.e the application money received is returned back.
(ii) It may not allot any share to some applicants, whereas it may make pro-rata allotment to other applicants.
(iii) It may not allot any share to some applicants, full allotment may be made to some other applicants and pro-rata allotment may be made to the rest.

Q3) P and Q are partners in a firm sharing profits in the ratio 5 : 3. They admitted R and S as a new partner. P surrendered 1/2 of his share in favour of R and Q surrendered 1/4th of his share in favour of S. Calculate the new profit sharing ratio of P, Q, R and S. (Marks 3)
Ans3) P’s sacrifice = 1/2 x 5/8 = 5/16 (R’s gain)
Q’s sacrifice = 1/4 x 3/8 = 3/32 (S’s gain)
P’s new share = Old share – sacrifice
= 5/8 – 5/16 = 5/16
Q’s new share = Old share – sacrifice
= 3/8 – 3/32 = 9/32
… New Profit sharing ratio :
P : Q : R : S
=5/16 : 9/32 : 5/16 : 3/32
= 10 : 9 : 10 : 3

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