COMPANY FINAL ACCOUNTS by SONALPAHUJA

VIEWS: 914 PAGES: 14

									                              COMPANY FINAL ACCOUNTS
Q.1
AMAR ENTERPRISES LIMITED is incorporated with Authorised Capital of Rs.1,00,00,000, divided in
equity shares of Rs.100 each. 50% of these shares are issued and subscribed. On 1 st April 2001, Rs.75
was called up on each share.
During the year these shares were made fully paid up by capitalizing General Reserve to the required
extent. However, accounting entries for the same are not passed.
The following balances are extracted as on 31st March 2002 from books of accounts:
Particulars                                    Rs. Particulars                                     Rs.
Share Capital                            37,50,000 Cash on Hand                                 77,500
Furniture                                 1,57,500 Repairs & Maintenance                      1,07,500
Plant                                    53,73,000 Closing Stock of Raw Materials            33,37,500
Building                                  9,26,250 Creditors                                 42,50,000
Miscellaneous Expenses                    7,62,500 Directors Fees                                5,000
General Reserve                          50,00,000 Stock of Finished Goods                   38,75,000
Land                                      3,75,000 Bank Balance                               1,00,000
Sales                                 5,38,75,000 Provision for Tax (for last year)          16,25,000
Security Premium                         12,50,000 Debtors                                   16,27,000
Staff Advances                              61,250 Raw Materials Consumed                  3,57,50,000
Advances from Customers                   6,25,000 Power                                      1,10,000
Salaries, Wages & Bonus               1,45,00,000 Rent Paid                                     66,250
Loan from Bank (secured)                  1,56,250 Miscellaneous Receipt                      6,75,000
Travelling and Conveyances                  51,250 Commission                                    7,500
Auditors Payments                           18,750 Investment                                 1,25,000
Advance Tax Payment:                                Prepaid Expenses                            57,500
 - For Last Year                          8,75,000
 - For Current Year                      28,75,000

Further Data:
1. Income-tax for earlier year was assessed at Rs.15,50,000. The Company has neither disputed nor
    paid differential amount.
2. Provision for income-tax for Current Year is to be made @ 45%.
3. On 31st March, 2002 Stock of Finished Goods is valued Rs.7,00,000 at cost.
4. Miscellaneous Expenses include depreciation provided for the year as under:
   Plant - Rs.5,97,000 , Furniture - Rs.17,500 & Building - Rs.23,750.
5. The Directors recommended dividend @ Rs.15 per share.
6. Balance in Profit & Loss account is to be transferred to General Reserve.
7. Auditor’s payment include Rs.3,000 for tax matters and Rs.750 for reimbursement of expenses.
8. Investments are 16% Debentures of Gem Limited of face value of Rs.1,50,000 (present market
   value is Rs.1,75,000). Interest received for the year is included in Miscellaneous Receipt.
You are required to prepare Final Accounts as per Companies Act and Accounting Standard 1.




Q.2

Company Final Accounts                                                                               - 31 -
Savita Limited is a Company registered with an Authorised Capital of Rs.25,00,000 divided into equity
shares of Rs.100 each. 50% of the shares are issued on which Rs.80 per share is called up.
The following balances are extracted from its ledger as on 31st December, 2001.
Particulars                                                                   Debit Rs.    Credit Rs.
Share Capital                                                                              10,00,000
Machinery (Cost Rs.20,00,000)                                                14,60,000
Furniture (Cost 1,75,000)                                                     1,30,000
Stock                                                                         8,30,000
Debtors / Creditors                                                          10,18,750      6,58,400
Cash on Hand                                                                     2,500
Current A/c with Bank                                                         1,25,000
General Reserves                                                                            5,50,000
Interim Dividend paid                                                           50,000
Security Premium                                                                              25,000
12%Secured Debentures                                                                       5,00,000
Debenture Redemption Reserve                                                                1,00,000
Profit & Loss A/c:
(Opening balance)                                                                           2,86,900
(Current Year)                                                                              4,56,500
Provision for Income Tax                                                                    2,45,000
Advance Income Tax                                                            1,90,550
Prepayments                                                                     15,000
                                                                             38,21,800     38,21,800
Additional information:
1) During the year General Reserve was utilized to the extent of Rs.5,00,000 as under:
   a) Paying up final call of Rs.20 per share on present capital, and
   b) Issue of bonus shares in ratio of one fully paid share for five shares held. The accounting entries
        for the same are yet to be made.
2) One of the employees who was injured while working in the Company has filed a suit for damages
   for Rs.5,00,000, the Company has not made any provision as it has been advised that suit is likely
   to be decided in favour of Company.
3) As per instruction given to the Bank Rs.1,00,000 is transferred from Current Account to account of
   Vanita Ltd. as consideration for 10,000 equity shares @ Rs.10 per share.
   (Market value of Investment is Rs.1,05,000).
4) One of the customers directly paid Rs.30,000 to one of the suppliers. Since the intimation was not
   received in time, effect is yet to be given.
5) The Directors proposed to:
   a) Transfer Rs.1,00,000 to Debenture Redemption Reserve.
   b) Declare Final Dividend at 10% on revised share capital.
You are required to prepare-
a) Profit and Loss Appropriation Account.
b) Balance Sheet keeping in minds the prescribed formats and applicable accounting standards.




Q.3
Following balances are extracted from the books of Modern Industries Limited as on 31st March, 2002:
Company Final Accounts                                                                                  - 32 -
Particulars                                                                     Rs.             Rs.
Share Capital:
1,00,000 Equity Shares of Rs.10 each                                                      10,00,000
Freehold Factory Premises                                                  7,00,000
Leasehold Office Premises                                                  5,00,000
5,000, 6% Debentures of Rs.100 each                                                        5,00,000
Bank Balance                                                                 10,500
General Reserve                                                                              75,000
Motor Car                                                                  1,15,000
Plant & Machinery                                                          2,70,000
Sinking Fund for Leasehold Premises                                                          15,000
Sundry Debtors                                                             2,50,000
Computer                                                                     30,000
Profit & Loss Account:
 - Year ended 31-3-2001                                         22,455
 - Year ended 31-3-2002                                       6,25,000
                                                              6,47,455
Less: Debenture Interest                                        30,000                     6,17,455
Goodwill                                                                   2,00,000
Stock                                                                      1,30,000
Cash in Hand                                                                  1,955
                                                                          22,07,455       22,07,455

At the meeting of the Board of Directors, it was decided to provide:
1. 3% Depreciation on freehold factory premises.
2. 10% Bonus on the years salary to office staff of Rs.80,000.
3. 15% Bonus on the years wages to factory workers of Rs.1,00,000.
4. 10% Sinking Fund on leasehold premises.
5. Rs.3,000 as Directors Fees.
6. 15% Dividend for the year to shareholders (Ignore Income Tax).
7. Transfer Rs.30,000 to General Reserve Account.
Prepare Profit & Loss Account, Profit & Loss Appropriation Account and Balance Sheet in the
prescribed form as per schedule VI of the Companies Act, 1956, as on 31st March 2002 making suitable
disclosure under Accounting Standard 1




Q.4
Enkay Enterprises Ltd. requests you to prepare its Final Accounts as per Companies Act, 1956 and the
Account Standard 1 from the following Trial Balance covering period 1-4-2001 to 31-3-2002:
Company Final Accounts                                                                             - 33 -
Particulars                 Debit Rs.   Credit Rs. Particulars                 Debit Rs.   Credit Rs.
Freehold Property           8,00,000               Debtors & Creditors         2,00,000     1,50,500
Machinery                  12,00,000               Fixed Deposits with Bank    1,20,000
Share Capital                           30,00,000 Repairs & Maintenance          22,000
General Reserve                          4,09,200 Audit Fees                      7,000
Land                        2,00,000               Advance Income Tax          1,10,000
Furniture                     80,000               (2000-01)
Goods in Transit              20,000               Advance Income Tax          2,40,000
Cost of Sales              38,00,000               (2001-02)
Sales                                   47,50,000 Provision for Tax                         1,18,000
Stock                      11,50,000               (2000-01)
Investments                 2,50,000               Security Deposits             25,000
Vehicles                    1,60,000               12% Debentures                           1,25,000
Conveyance & Traveling        41,400               (Issued on 1-10-2001)
Insurance Premium             24,300               Bank Loans (Secured)                     1,00,000
(1-7-2001to 30-6-2002)                             Cash on Hand                  40,000
Salaries                    1,20,000               Current A/c with Bank         55,000
                                                   Provision for Bad Debts                    12,000
                                                                              86,64,700    86,64,700
Additional information:
1) The Authorised capital of Company is Rs,50,00,000 divided in equity shares of Rs.100 each, 80%
    of these are issued on which Rs.75 is called-up.
2) Bank loan is secured on Fixed Deposits with same bank. On 31-3-2002 Fixed Deposit matured.
    Proceeds of the same together with interest for one year @ 10% was utilised by bank for
    repayment of loan together with interest thereon @12% for the same period. The net amount is
    credited by bank in Current Account but the effect is not given in above Trial Balance.
3) Income Tax paid for 2000-2001 was for full liability and there are no arrears. The provision for
    2001- 2002 is to be made @ 40% of profit as per accounts.
4) Investment details are:
    a) Rs.1,00,000 in Tee Bee Ltd. in the form of 20,000 shares of 10 each, Rs.5 is called-up. Market
    value is Rs. 6 per share.
    b) Rs.1,50,000 as capital in M/s. Bunny Agencies, wherein Company is partner with 30% share in
    profits.
5) Depreciation is to be provided on W.D.V. basis and the cost of fixed assets is as under:
Particulars                                                     Depreciation Rate            Cost Rs.
Machinery                                                                    15%            20,00,000
Freehold Property                                                             5%            15,00,000
Land                                                                             -           2,00,000
Vehicles                                                                     20%             2,00,000
6) Provide for -
    a) Share of profit in firm Rs.30,000 credited to Company’s Account by the firm.
    b) Tee Bee Ltd. has declared dividend @ Rs.1.50 per share.
    c) Other items of income / expenses arising from the above details
7) Salaries include remuneration to Managing Director @ Rs.5,000 per month.
8) Audit Fees included Rs.2,000 for Tax Consultancy Services.
9) Debtors include Rs.40,000 due for more than six months. Further provision for Bad Debts is not
    necessary.
10) Directors propose dividend on Equity Shares @ 10% on called up capital.

Q.5
M/s Alpha Industries Limited incorporated with Authorised Capital of Rs.5,00,000, divided in Ordinary
Shares of Rs.10 each, of these, 30,000 shares are issued on which Rs.8 per share is called up.
The Trial balance as on 31st March, 2002 is as follows:
Company Final Accounts                                                                              - 34 -
Debit                                          Rs.   Credit                                          Rs.
Purchases                                 2,18,000   Share Capital                              2,40,000
Salaries                                    62,000   General Reserves                             40,000
Furniture                                    3,500   Profit & Loss A/c                            25,000
Directors’ Fees                              5,000   Sales                                      3,28,000
Debtors                                   1,25,000   Bank Loan                                    66,000
Insurance Premium                            3,200   Bills Payable                                16,000
Interest on Loan                            10,000   Creditors for Goods                          16,000
Stock                                       72,000   Creditors for Expenses                       27,000
Prepaid Expenses                             2,000   Provision for Bad Debts                       2,000
Professional Fees                           10,000   Interest on Investment                        1,000
Rent                                         2,500   Unclaimed Dividends                           2,000
Land & Buildings                          1,10,000   Provisions for Taxes (last year)              8,000
Plant & Machinery                           75,000
Audit Fees                                   5,000
Repairs                                      3,200
Printing and Stationery                      1,100
Cash on Hand                                 6,200
Bills Receivable                             7,500
Advances                                    12,000
Preliminary Expenses                         6,000
Bank                                        31,800
                                          7,71,000                                              7,71,000
Additional Data:
1) During year 2001-2002 a call of Rs.2 was made by Directors. All shareholders except holders of
   1,000 shares paid the amount. The amount received was deposited in separate new bank account.
   This account is not included in the books.
2) Preliminary Expenses incurred in earlier year was Rs.10,000. This is being written off in five years.
3) Stock on 31-3-2002 is valued at cost Rs.1,90,000, market value Rs.2,10,000.
4) Professional fees include Rs.5,000 paid to Auditors for taxation matters.
5) Provide for depreciation on W.D.V. basis on Land & Building at 5%, Plant & Machinery 20%,
   Furniture 10%. Original costs are - Land & Building Rs.2,00,000, Plant & Machinery Rs.1,50,000
   and Furniture Rs.10,000.
6) Purchases include cost of Furniture costing Rs.10,000
7) A direct payment of Rs.25,000 was made from Bank 16% Bond of I.D.B.I. on 1-1-2002. The entry
   for above is not passed.
8) The income-tax assessment for last year was completed determining liability at Rs.12,000. The
   payment made was shown as Advance. (The Provision for income tax for current year is to be
   made at Rs.25,000).
9) Directors propose to transfer to General Reserves Rs.10,000 and dividend at Rs.3 per share.
10) Claim for compensation by a worker is pending in Court Rs.50,000.
You are required to prepare Final Accounts in the statutory formats along with necessary schedules.

Q.6
Following Trial Balance is extracted from the books of Sure Success Ltd. as on 31st December 2001:
Particulars                                     Rs. Particulars                                  Rs.



Company Final Accounts                                                                                     - 35 -
Land (cost)                               8,72,500 Share Capital                                  19,00,000
Building (at cost less depreciation)     15,00,000 Forfeited Shares A/c                              70,000
Plant & Machinery                         8,00,000 General Reserve                                 8,00,000
(at cost less depreciation)                        Security Premium A/c                            2,00,000
Furniture                                 1,50,000 Gross Profit                                   10,22,500
(at cost less depreciation)                        Provision for Taxes Balance b/f                 1,50,000
Selling Expenses                          1,20,000 Bad Debts Recovered                                5,000
Directors Fees                              24,000 Miscellaneous Receipts                            40,000
Administrative Expenses                   2,80,000 6% Debentures Secured by a
Sinking Fund Investment                   4,08,000 floating charge on all assets                  20,00,000
Bad Debt                                    15,000 Profit & Loss A/c balance b/f                   3,35,000
Sundry Debtors                           17,35,000 Sinking Fund for redemption of
Paid to Auditors                            15,000 Debentures                                      4,08,000
Advance Tax Paid:                                  Sundry Creditors                                2,30,000
  - for 2000                              1,20,000 Interest on Sinking Fund
  - for 2001                                80,000 Investments                                       25,000
Closing Stock                             7,50,000 Liabilities for Expenses                         40,000
Cash in Hand                                56,000 Fixed Deposits from public                      5,00,000
Cash at Bank                              6,80,000
Debenture Interest                        1,20,000
                                         77,25,500                                                77,25,500
Following further particulars are available:
1) Administrative expenses include Rs.60,000 paid to Managing Directors as advance against his
    remuneration. He is entitled to only Rs.14,500 being remuneration calculated on the profits of the
    Company.
2) Sinking fund is to be credited with Rs.2,00,000, which together with interest received would be
   Invested on 1-1-2002.
3) Income tax assessment for 2000 has been completed on 20 th December, 2001 on gross demand
   for Rs.1,40,000 but no effect has been given in the books.
4) At the meeting held on 3-12-2001 the board of Directors decided to allot one fully paid bonus share
   against two shares held by the members on 25-12-2001, but no effect has been given to the same
   (Directors decided to utilize Security Premium Account fully for this purpose).
5) Provision for taxation is to be made for the year amounting to Rs.2,01,500.
6) Directors have proposed a final dividend @ 10% on all shares (including bonus shares)
7) Of the Sundry Debtors Rs.10,50,000 are due for more than six months. There are no doubtful
   debts.
8) Depreciation written off up to the last year at rates mentioned against each is as follows -
   Building: Rs.50,000 (2-1/2%), Plant Rs.4,50,000 (15%), Furniture Rs.50,000 (10%).
   Provide depreciation for the current year on WDV basis.
9) Market value of Sinking Fund Investments on 31-12-2001 was Rs.4,20,000.
10) Auditors have been paid Rs.5,000 for attending tax matters.
11) Company’s Authorised Capital is Rs.50,00,000 divided into 50,000 shares of Rs.100 each.
Prepare Final Accounts in accordance with the requirements of the Companies Act and AS 1.

Q.7
From the following information, prepare the Final Accounts of Trimurti Ltd. as per the requirement of
Companies Act, 1956 as well as of Accounting Standard 1:
                                    Trial Balance as on 31-3-2004

Company Final Accounts                                                                                    - 36 -
Particulars                                                                      Rs.             Rs.
Equity Share Capital ( 80,000 shares of Rs.10 each )                               -        8,00,000
9% Preference Share Capital ( 2,000 shares of Rs.100 each )                        -        2,00,000
Reserves                                                                           -        2,52,000
Profit & Loss A/c (1-4-2003)                                                       -           6,000
Bank                                                                           1,340               -
Calls in arrears ( Final call of Rs.3 on equity shares )                       6,000               -
Redemption Account                                                            44,000               -
Debtors / Creditors                                                         4,35,000        1,62,000
Advance Tax / Tax Provision:
2001-2002 (AY 2002-2003)                                                      81,000             84,000
2002-2003 (AY 2003-2004)                                                      72,600             70,000
2003-2004 (AY 2004-2005)                                                      65,000                  -
Commission Paid (Net of TDS Rs.440)                                            8,000                  -
Discounts                                                                          -              4,700
Stock                                                                       1,22,000                  -
Fixed Assets at cost / Accumulated Depreciation:
Land                                                                        1,40,000               -
Building                                                                    6,12,000          52,000
Machinery                                                                   6,26,200        3,86,000
Vehicles                                                                    1,67,700          42,000
Vehicle Sale (Cost Rs.65,000: Profit Rs.6,000)                                     -          50,000
Gross Profit                                                                       -        3,66,540
Establishment Expenses                                                        94,400               -
                                                                           24,75,240       25,75,240
Additional Information:
1) Redemption Account balance represent redemption at a premium of 10%.
2) Assessment for AY 2002-2003 was completed resulting in an additional demand of Rs.3,000;
   Assessment for AY 2003-04 resulted in an additional demand of Rs.26,000 of which the Company
   has disputed Rs.12,000 in appeal.
3) Provision for income tax is to be made at 40% for the year ending 31-3-2004.
4) Depreciation is to be charged on WDV basis at 5% on buildings, 15% on machinery and 10% on
   vehicles.




Q.8
The following balance appeared in the books of Titan Manufacturing Co. Ltd. as on 31-12-,2001.
Particulars                                                                                         Rs.


Company Final Accounts                                                                                - 37 -
Equity Share Capital (Shares of Rs.100 each)                                                 4,99,000
9% Preference Share Capital (Shares of 10 each)                                              2,00,000
Sundry Creditors for goods supplied                                                            72,000
Manufacturing Wages accrued due                                                                 7,500
Salaries for December 2001 unpaid                                                               6,750
Profit and Loss Account (Cr.) as on 1st January, 2001                                          42,500
Stock in trade on 31st December,2001:
  Raw Material                                                                   27,500
  Finished goods                                                                  42,000
  Work in Progress                                                               13,750        83,250
10% Debentures                                                                                 50,000
[secured by a floating charge on all the assets, Interest due on 31st Dec. each year]
General Reserve                                                                                12,500
Deposit received from Customers                                                                75,000
Plant and Machinery (at cost Rs.6,00,000)                                                    4,40,000
Furniture and Fittings (at cost Rs.50,000)                                                     42,500
Motor Car and Vehicles (at cost Rs.1,00,000)                                                   92,300
Sundry Debtors (of whom Rs.20,000 are due for more than 6 months)                            1,70,000
Advance Income Tax paid                                                                        27,000
5 ½% Govt. of India Bonds (at cost)                                                               990
(Face value Rs.1,000 but market value at 2% premium)
Factory leasehold building (at cost)                                                           88,000
Gross Profit for the year ended 31-12-2001                                                   2,70,000
Salaries                                                                                       72,000
Printing and Stationery                                                                         6,000
Vehicles Maintenance                                                                           22,275
Repairs and Renewals                                                                            5,670
Rates and Taxes                                                                                 2,500
Director’s Sitting Fees                                                                         1,400
Cash on Hand                                                                                   42,275
Deposit with S.B.I                                                                           1,00,000
Cash with U.T.I. Bank on Current A/c                                                           22,300
Directors Remuneration                                                                         16,790
The following additional information is also made available to you:
1) The Company has entered into a contract with a German supplier of machinery and has furnished
   to the foreign party a guarantee from the S.B.I. The value of the contract is Rs.2,50,000.
2) The deposit with S.B.I. was made on 1st Oct.2001 on an interest @ 3% p.a., no interest has been
   received till 31st December 2001.
3) On 5-1/2% Govt. of India Bonds, interest is due at half yearly intervals on 30 th June and 31st Dec.
   every year. The Company has not collected interest during the year 2001 and no entry has been
   passed in the books.
4) The Directors have decided to transfer Rs.5,000 to Debenture Redemption Reserve.
5) Depreciation on W.D.V. basis has to be provided as follows:
   (a) Furniture & Fitting @ 10% (b) Motor cars & Vehicles @ 20% (c) Plant & Machinery @ 10%
6) Rs.40,000 worth of Machinery was purchased on 1st July, 2001.
7) 1/11th of Factory Leasehold Building is to be written off every year.
Company Final Accounts                                                                                - 38 -
8) No provision has been made in the accounts for the sitting fees due to the Directors of Rs.150 for
    their meeting held on 28th Dec.2001.
9) Make provision for taxation Rs.30,000.
10) Dividend is proposed only on Pref. Shares. Prepare Final Accounts for the year ended 31/12/2001

Q.9
The following balances have been extracted from the books of ACE Limited as on 31 st March, 2002.
Debit                                         Rs. Credit                                          Rs.
Freehold Land                           2,00,000 Income from Investment (net)                  4,000
Building                                1,75,000 Provision for bad & doubtful debts            2,000
Furniture                                 25,000 Creditors                                    30,000
Debtors (unsecured)                     1,50,000 Provision for Depreciation on
Stock (on 31st March, 2002)               60,000 1st April 2001: Building                     15,000
Cash at Bank                               5,000               : Furniture                     6,000
Cash in Hand                               1,000 Suspense                                      6,000
Cost of Goods Sold                      3,10,000 Equity Share Capital                       3,66,500
Salaries and Wages                        20,000 9% Cumulative Preference Shares
Miscellaneous Expenses                     8,000 of Rs.100 each                             1,00,000
Investment in Shares                    1,80,000 Security Premium                             10,000
Interest                                   3,000 Bank Overdraft                             1,52,500
Bad Debts                                  1,000 Sales                                      4,50,000
Repairs and Maintenance                    1,500 Profit & Loss A/c 1st April, 2001             3,500
Advance payment of Income Tax              6,000
                                       11,45,500                                           11,45,500
The following particulars may be taken into account:
1) The Land was revalued by an expert valuer on 1st January, 2002 at Rs.3,00,000; but this was not
   given effect to, although the Directors had decided to give effect to this.
2) Provision for doubtful debts is to be adjusted to 5 per cent of the amount of Debtors.
3) Equity Share Capital composed of Rs.10 shares, 36,400 fully paid and 500 shares on which final
    call of Rs.5 remains unpaid.
4) Suspense include (1) Rs.1,000 representing surplus found on physical verification of closing stock,
    pending investigation; (2) money received from a new allottee for the re-issue of 500 shares
    forfeited during the year for non-payment of final call, but no entry for the above items is made.
5) Provision for taxation is to be made at 50 per cent.
6) Market value of Investment was Rs.1,90,000 on 31st March, 2002.
7) A Managing Director, entitled to 5% remuneration on the net profits, manages the Company.
8) Depreciation is to be charged on WDV of Building @ 2% p.a. and on Furniture @ 10% p.a.
9) The Company has arrangements with a Bank for overdraft up to limit of Rs.2,50,000 secured on
    Land and Buildings of the Company.
10) Dividend on Preference shares was in arrears for 5 years upto 31st March, 2002. The Directors
    decided to pay the dividend for four years.
11) Income tax deducted from the income from investment amounted to Rs.500.
Prepare Final Accounts for the year ended 31/12/2002.

Q.10
The Authorised Capital of Unique Ltd. is Rs.6,00,000 consisting of 3,000 6% Preference Shares of
Rs.100 each and 30,000 Equity Shares of Rs.10 each. Following balances appear 31 st Dec. 2002:
Particulars                                                               Debit Rs.       Credit Rs.
Purchases                                                                  4,90,500
Company Final Accounts                                                                               - 39 -
Packing Charges                                                                 18,000
Delivery Expenses                                                               35,400
Stock: 1.1.2002                                                               1,45,200
Salaries & Wages                                                                52,000
Rent & Rates                                                                    17,500
Freight & Carriage                                                               8,200
Final Dividend for 2001                                                         12,000
Preference Dividend: Half year to 30-6-2002                                      6,000
Discount on issue of Debentures                                                  2,000
Preliminary Expenses                                                             1,000
Bills Receivable                                                                41,500
Interest on Bank Overdraft                                                       7,800
Debenture Interest: Half year to 30-6-2002                                       3,750
Sundry Debtors & Creditors                                                      50,000        92,000
Free hold property at cost                                                    4,00,000
Furniture at cost less depreciation of Rs.15,000                                35,000
6% Preference Share Capital                                                                  2,00,000
Equity Share Capital                                                                         2,00,000
5% Mortgage Debentures secured on Freehold Property                                          1,50,000
Taxation Advance payment for 2002                                               15,000
Profit & Loss Account                                                                          28,500
Sales (net)                                                                                  6,70,350
Bank Overdraft secured by hypothecation of Stock and Receivables                             1,50,000
Technical know-how at cost                                                    1,50,000
                                                                             14,90,850     14,90,850
1) Closing Stock valued at Rs.1,42,500.
2) Salaries and Wages include Rs.2,000 being wages incurred for installation of electrical fittings in
   the factory. Electrical fittings have been recorded under “Furniture”.
3) Bills Receivable include Rs.1,500 being dishonored bills. 50% of Rs.1,500 has been considered to
   be irrecoverable.
4) Bills of Rs.2,000 maturing after December, 2002 were discounted.
5) Charge depreciation @ 20% on Furniture.
6) Write off Discount on Debentures Rs.1,000.
7) Dividend at 5% is proposed on Equity Share Capital.
8) Provision for Taxation Rs.8,000.
9) Technical Know-how is to be written off over a period of 15 years.
10) Salaries and Wages include Rs.10,000 being the Directors Remuneration.
Prepare Final Accounts for the year ended 31/12/2002. Previous year figures need not be mentioned.


Q.11
Sanjay Co. Ltd. is a registered company with an authorized share capital of Rs.70,000 dividend into
7,000 Equity Shares of Rs.10 each. Company’s Trial Balance as on 31-3-2009 was as under:
Debit Balance                               Rs. Credit Balance                                 Rs.



Company Final Accounts                                                                               - 40 -
Building (Cost Rs.50,000)                      40,000     Share Capital:
Furniture (Cost Rs.5,000)                       4,000     5,000 Equity Shares of Rs.10 each    50,000
Vehicles (Cost Rs.10,000)                       6,500     6% Debentures of Rs.100 each         10,000
Equity Shares of Companies                     20,000     Provision for Tax                    10,000
(Market Value Rs.22,000)                                  (Accounting year 2007-08)
500-8% Preference Shares of                               Sundry Creditors                      7,500
Rs.10 each, Rs.6 / share paid up                3,000     Bills Payable                         4,000
Stock in Trade at cost                         20,000     General Reserve                      10,000
Sundry Debtors                                 14,000     Profit & Loss Account (1-4-2008)      2,000
Cash at Bank                                    8,750     Gross Profit                         55,000
Discount on Debentures                            400     Dividend on Shares                      700
Salaries                                       10,000     (Gross Rs.1,000)
Directors Fees                                    400
Audit Fees                                        650
Debenture Interest                                500
Advance Payment of Income Tax:
Accounting year 2007-08                          9,000
Accounting year 2008-09                          9,000
Advance against construction of
 Building                                       3,000
                                             1,49,200                                         1,49,200
Adjustments:
1) Provide 10% Depreciation p.a. on cost of Fixed Assets.
2) The Company had given a contract for the construction of a Building at Rs.1,00,000 which is still
    incomplete.
3) Provide Rs.10,000 in respect of taxation liability for the year 2008-09.
4) Write back Rs.200 liability included in Sundry Creditors.
5) Due to change in the basis of valuation of stock, its value has come down to Rs.18,000. This has
    not been considered as yet.
6) Dividend is proposed for the year @ 10%.
7) Sundry Debtors include Debts which are due for more than 6 months Rs.4,000.
8) Income Tax assessment for the accounting year 2007-08 has been completed with gross demand
    of Rs.11,000.
9) Ignore previous year’s figures and tax on proposed dividend.
Prepare Profit and Loss Account for the year ended 31-03-2009 and Balance Sheet as on that date in a
vertical form as per the provisions of the Schedule VI of the Companies Act, 1956 taking into
consideration the above mentioned adjustments.




Q.12
Trial Balance of K. Swapnil Ltd. as on 31st March, 2009 is as below:
Particulars                                                                            Rs.         Rs.



Company Final Accounts                                                                               - 41 -
16,000 Equity Shares of Rs.100 each paid up                                                  -         16,00,000
Securities Premium                                                                           -            15,000
General Reserve                                                                              -            50,000
Gross Profit                                                                                 -          8,00,000
Discount Received                                                                            -             8,700
Creditors                                                                                    -            25,800
Profit & Loss Account                                                                        -            20,000
Provision for Taxation (Accounting Year 2007-08)                                             -            70,000
Interest Received (net after TDS)                                                            -             9,500
Land (Cost)                                                                           1,55,000                 -
Building                                                                              3,00,000                 -
Plant & Machinery                                                                     2,50,000                 -
Furniture                                                                             1,00,000                 -
Vehicles                                                                              1,50,000                 -
Office Salaries                                                                       1,55,000                 -
Office Rent                                                                           1,20,000                 -
Establishment Expenses                                                                  58,000                 -
Finance Expenses                                                                        49,000                 -
Debtors                                                                                 90,000                 -
Interim Dividend                                                                        80,000                 -
Cash on hand                                                                             8,000                 -
Bank balance                                                                          2,00,000                 -
Security Deposit                                                                         7,800                 -
Advance Tax (Accounting Year 2008-09)                                                 1,00,000                 -
Investments (5% Government Securities)                                                2,10,000                 -
Stock - Raw Materials                                                                 1,50,000                 -
Stock - Work-in-progress                                                              1,75,000                 -
Stock - Finished Goods                                                                1,25,000                 -
Advance Tax (Accounting Year 2007-08)                                                   80,000                 -
Selling and Distribution Expenses                                                       36,200                 -
                                                                                     25,99,000         25,99,000
After taking into account following adjustments, prepare final accounts for the year ended 31st March, 2009.
1) Write off depreciation on fixed assets on the original cost of fixed assets as hereunder.
                            Name                            Cost (Rs.)           Rate %
                            Building                         4,00,000              2.5%
                            Plant & Machinery                5,00,000               10%
                            Furniture                        2,00,000               15%
                            Vehicles                         3,00,000               20%
2) Market value of Investments is Rs.2,15,000 while face value is Rs.2,00,000.
3) Auditors Remuneration is to be provided Rs.16,000. It includes their fees as auditors Rs.10,000, as
    consultants for tax matters Rs.4,000 while the remaining amount is as consultants on company law matters.
4) Managing Director’s remuneration paid Rs.5,000 per month is included in office salaries. However, he is
    entitled to remuneration of Rs. 70,000 p.a.
5) Provide for Salaries Rs.8,000, Rent Rs.10,000, Establishment Expenses Rs.7,000 as outstanding expenses
    for the year.
6) General Reserve includes profit on re-issue of forfeited shares earned Rs.5,000.
7) Provision for taxation to be made Rs.1,00,000 for the current year.
8) Debtors include debts due for more than 6 months Rs.15,000. (Considered to be good & unsecured)
9) Tax Assessment for accounting year 2007-08 was completed resulting into gross demand of Rs.78, 000.
10) Interest received on Govt. Securities is after deducting of income tax of Rs.500 for current year.
11) Ignore previous year’s figures and Corporate Dividend Tax.

Problems for Practice
Q.13
Following is the Trial Balance of KKK Ltd. as on 31st March, 2007:

Company Final Accounts                                                                                         - 42 -
Debit Balances                                 Rs.   Credit Balances                              Rs.
Fixed Assets (Net Block)                  7,50,000   Equity Share Capital                    4,40,000
Investment                                2,50,000   (Rs.10 each fully paid)
Closing Stock                             3,75,000   9% Preference Share Capital             1,00,000
Sundry Debtors                            1,22,500   (Rs.100 each fully paid)
Preliminary Expenses                        20,000   Profit & Loss Account                  2,80,000
Staff Advances                            1,00,000   Securities Premium                       30,000
Advance Tax                                 60,000   Debenture Redemption Reserve           2,00,000
Bills Receivables                           45,000   General Reserve                          75,000
Advance to Suppliers                        27,500   8% Debentures                          5,25,000
Cash in Hand                                12,500   Loan from Director Mr. D                 10,000
Bank Balance                              1,10,000   Loan from Subsidiary Company             70,000
                                                     Sundry Creditors                         58,500
                                                     Bills Payable                            21,500
                                                     Provision for Taxation                   62,500
                                         18,72,500                                         18,72,500
Additional Information:
1) Transfer to debenture redemption reserve Rs.50,000 and General Reserves Rs.25,000.
2) The Company declared dividend on Equity share capital at 15%.
3) Entire authorised share capital has been issued & subscribed.
4) 8% Debentures are secured against all fixed assets. The figure in trial balance includes interest
    accrued and due Rs.25,000.
5) Loan from Directors and Subsidiary Company are unsecured.
6) Creditors include creditors for goods Rs.40,000 while for expenses Rs.18,500.
7) Stock comprises of Raw Materials Rs.2,50,000, Work in Progress Rs.50,000 and Finished Goods
    Rs.75,000.
8) Of the debtors, debts due for more than 6 months is Rs.22,500. All debts are unsecured and
    considered to be good.
9) Profit & Loss Account figure in Trial Balance is arrived at as under:
                                          Rs.
    Previous Year’s Balance b/d           1,48,500
    Net Profit for the Year               1,31,500
                                          2,80,000
10) Ignore Previous Year’s figures.
After considering the above adjustment, prepare Profit & Loss Appropriation Account for the year ended
31st March, 2007 and Balance Sheet of the Company as at that date in the vertical form as per
schedule VI requirements with following schedules:
1)   Share Capital
2)   Reserves & Surplus
3)   Secured Loans
4)   Unsecured Loans
5)   Current Assets, Loans & Advances
6)   Current Liabilities & Provisions.


Q.14
Mr. Confused is the Accountant of M/s Ultimate Confusion Ltd. He presents to you the following Trial
Balance as on 31-3-2005. The cash in hand on 31-03-2005 is Rs.750
Debit                                       Rs. Credit                                         Rs.

Company Final Accounts                                                                               - 43 -
Bank Balance                                 72,900    Subscribed Capital                      4,00,000
Calls in Arrears                              7,500    6% Debentures                           3,00,000
Land & Building                            3,00,000    Profit & Loss A/c (Cr.)                   13,625
Machinery                                  2,97,000    Sundry Debtors                            87,000
Interim Dividend Paid                        37,500    Sales                                   4,15,000
Stock (1-4-2004)                             75,000    Preliminary Expenses                       5,000
Sundry Creditors                             40,000    Sinking Fund                              75,000
Bills Payable                                38,000
Furniture                                     7,200
Purchases                                  1,85,000
Provision for Bad Debts                       4,375
Investments                                  75,000
Salaries and Wages                         1,03,600
Fuel                                         13,200
Rent, Rates & Taxes                           3,800
Discount Allowed                              6,400
Directors Fees                                5,700
Bad Debts                                     2,100
Debenture Interest                            9,000
Sundry Expenses                               2,350
Deposits from Public                         10,000
                                          12,95,625                                           12,95,625
After locating the mistakes and making the following adjustments, prepare Trading and Profit and Loss
Account for the year ended 31-03-2005 and Balance Sheet as on that date in a vertical form. Ignore
previous year figures.
1) Authorised capital of the company is 60,000 Equity Shares of Rs.10 each. The calls in arrears are
   @ Rs.5 per share.
2) Stock on 31-03-2005 was Rs.1,37,120.
3) Write off 1/5th of the preliminary expenses.
4) The details of Fixed Assets are as under:
    Particulars         Original Cost (Rs.)       Depreciation till 31-3-04      Rate of Depreciation
  Land & Building            3,50,000                     50,000                         5%
    Machinery                4,00,000                   1,03,000                         20%
     Furniture                10,000                       2,800                         10%
The depreciation during the year is to be charged on W.D.V. as at the beginning of the year. There was
no addition or deduction during the year.
Note: Rectified Trial Balance is not required.




Company Final Accounts                                                                                  - 44 -

								
To top