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1. Preparation of Profit and Loss Account, Profit
and Loss Appropriation Account and Balance Sheet
of a Company:
The Trial Balance of T.V. Limited [having an authorised
capital of Rs. 8,00,000] at 31st December 1996 was as
Further information:
(1) Of the shares allotted 2,000 shares worth Rs. 2,00,000 were
allotted as fully paid to vender from where a running business was
(2) Of the Debtors Rs. 10,000 were outstanding but are
considered good except a debt of Rs 5,000 doubtful to be
(3) A provision of Rs. 25,000 is to be made for Income Tax.
(4) The market value of Government securities on the date of the
Balance Sheet was Rs. 93,000 and that of equity shares was
(5) Auditor’s fee Rs. 3,000 should be provided for. Included in
General Expenses is six month’s insurance Rs. 1,500 paid for the
year to end on 30th June 1997.
(6) Interest on Debentures issued and on Investment in
Government Securities should be taken into account.
(7) Depreciation is to be provided for @ 6% original cost of
Machinery and 2% on the original cost of Land and Building.
(8) Provide for a dividend of 5% on shares.
Prepare Profit and Loss Account, Profit and Loss Appropriation
Account and the Balance Sheet as on 31.12.1996.
2. Preparation of Balance Sheet, Profit and Loss
Account in Accordance with the Requirements of
Companies Act, 1956:
The following balances and particulars are extracted
from the books of Pant Co. Pvt. Ltd. for the year ended
31st December 1994:
Further information:
(a) Rate of depreciation — Furniture 10%; Office Equipment’s
15%; Motor Car 20%
(b) M. D. is entitled to a commission @ 10% of net profit after
providing for such commission subject to maximum of Rs. 36,000
(c) Debtors include Rs. 1,50,000 outstanding for more than 6
months, out of this Rs. 20,000 is considered doubtful for which
provision is to be made in the accounts.
(d) Tax liability for 1994 is estimated at Rs. 2,00,000 for which
provision is to be made.
(e) Transfer to General Reserve Rs. 50,000 out of net profits and
Proposed Dividend is @ 6% on equity shares.
Prepare the Balance Sheet, Profit and Loss Account for the year
ended 31st December 1994 in accordance with the requirements
of Companies Act, 1956.
3. Preparation of Final Accounts of a Company
Ignoring Previous Year’s Figure:
The following Trial Balance has been drawn up from the
books of RED CIRCLES Ltd. as on 31st March 1999:
The following further particulars are available:
(1) Liabilities for expenses include the last quarter’s interest due
on unsecured loan.
(2) Payment to auditors include Rs. 2,000 paid for taxation work.
(3) Market value of Trade Investment is Rs. 85,000.
(4) Provision for Taxation is to be made at 45%.
(5) Secured loan is from the company’s bankers obtained against
charge of all the assets of the company.
(6) No adjustment has been made for the sale of Old Plant of Rs.
3,000. It is ascertained that the original cost and depreciation
provided on this item were Rs. 8,000 and Rs. 4,000, respectively.
(7) Unsecured loan is from a director carried forward from last
year, interest payable at 6% p.a. falling due on quarterly basis at
the end of each quarter.
You are required to prepared the Profit and Loss Account for the
year ended 31st March 1999 and a Balance Sheet as on that date
ignoring previous year’s figure.
4. Preparation of Final Accounts of a Company
According to Requirements of Schedule VI of the
Companies Act, 1956:
Depreciation is to be charged for the year on written-down value
at 10% on Plant and Machinery and Furniture and Fixtures and at
20% on Motor Car.
(iii) The unsecured loan was taken on 1.1.2000 at 18% interest.
Interest is payable half-yearly and necessary provisions are to be
made in the accounts.
(iv) Office administration expenses include Auditor’s fee Rs.
4,000 (including fee for taxation services, Rs. 800) and Director’s
Fees, Rs. 2,400.
(v) Provision for taxation is to be made for Rs. 2,80,000.
(vi) Preliminary Expenses are to be written-off.
(vii) The Directors have proposed a final dividend of 15% on share
capital in addition to interim dividend already declared.
Prepare Profit and Loss Account of ESSBEE Ltd. for the year
ended 31st March 2000 and Balance Sheet as at that date
according to requirements of Schedule VI of the Companies Act,
5. Preparation of Final Accounts of a Company
When Additional Information is Given:
Given below is the trial balance and additional information
relating to Bharat Implements Ltd., as at the end of their financial
year 1999-2000. Prepare the final accounts in proper form.
(d) Sundry Debtors include Rs. 121 thousand due for more than
six months out of which provision has been made for doubtful
debts at Rs. 45 thousand during the year.
(e) Included in other expenses are:
(i) Fees to auditors Rs. 65 thousand, out of which Rs. 15 thousand
are in other capacities; and
(ii) Interest on fixed loans Rs. 620 thousand, and other interest
Rs. 1,000 thousand.
(f) Rs. 340 thousand are to be re-transferred from development
rebate reserve account.
(g) Provisions are to be made for managing director’s
remuneration at 5% of net profits as provided under law, subject
to a maximum of Rs. 120 thousand per annum.
(h) Balance of profit is to be transferred to general reserve after
providing for dividend at 25% on capital.
(i) The authorised capital of the company is 20 lakhs Equity
Shares of Rs. 10 each.