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Financial Accounting (Mgt-101)
VU
Lesson-39
Financial Statements of Limited Companies
QUESTION # 1
KKB (Private) Limited is a manufacturing company. Following list of balances has been extracted from its
books as on June 30, 2002.
KKB (Private) Limited
Trial Balance As At June 30, 2002
Debit Rs.
Credit Rs.
Authorized Share Capital
500,000
Paid up Capital
300,000
Debentures
240,000
Accumulated Profit and Loss Account
49,489
General Reserve
8,000
Creditors
27,360
Accumulated Depreciation
Motor Vehicles
46,050
Building
66,000
Furniture and Fixtures
11,250
Proposed Dividend
15,000
Land
120,000
Building
315,000
Motor Vehicles
187,500
Furniture and Fixture
34,500
Stock in Trade
48,630
Debtors
42,525
Bank Balance
14,994
TOTAL
763,149
763,149
Note:
All items of profit and loss have been accounted for in calculating the balance of accumulated profit and loss
account, except for Depreciation which is to be charged at 10% on WDV on all depreciable assets.
Required
Prepare the balance sheet of Beta (Private) Limited As on June 30, 2002.
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Financial Accounting (Mgt-101)
VU
SOLUTION
Balance Sheet
KKB (Private) Limited
Balance Sheet As At June 30, 2002
Particulars
Note
Amount Rs.
Fixed Assets at WDV
1
492,330
Current Assets
Debtors
42,525
Stock in Trade
48,630
Bank Balance
14,994
106,149
Current Liabilities
Creditors
27,360
Proposed Dividend
15,000
42,360
Working Capital
63,789
Net Assets Employed
556,119
Financed By:
Authorized Capital
50,000 Shares of Rs. 10 each
500,000
Paid Up Capital
30,000 Shares of Rs. 10 each
300,000
General Reserve
8,000
Accumulated Profit and Loss Account
2
8,119
Share Holders Equity
316,119
Debentures
240,000
Total
556,119
Note 1 ­ Fixed Assets at WDV
Accumulated
Cost
Rate
WDV
Depreciation
Particulars
As At Addition/ As At
As At For The As At
As At
1-7-01  Deletion 30-6-02
1-7-01  Year  30-6-02
30-6-02
Land
120,000
0 120,000
0
0
0
0
120,000
Building
315,000
0 315,000
10
66,000 24,900
90,900
224,100
Furniture &
Fixtures
34,500
0
34,500
10
11,250
2,325
13,575
20,925
Vehicles
187,500
0 187,500
10
46,050 14,145  60,195
127,305
TOTAL
657,000
0 657,000
123,300 41,370 164,670
492,330
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Financial Accounting (Mgt-101)
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Note 2 ­ Accumulated Profit and Loss Account
Balance As Per Trial Balance
49,489
Less: Depreciation for the Year (note 1)
(41,370)
8,119
As depreciation is charged in profit & loss account and we did not prepare profit & loss account, in this case,
so depreciation will be deducted from accumulated profit & loss account.
QUESTION # 2
ABC Limted
Trial balance as on June 30, 2002
Particulars
Amount
Amount
Dr. (Rs.)
Cr. (Rs.)
Authorized Share Capital (Face value Rs. 10 each)
1,500,000
Paid up Capital
1,200,000
Share Premium
75,000
General Reserve
150,000
Accumulated profit brought forward
215,000
Opening Stock
902,000
Sales
4,575,000
Purchases
2,196,000
Motor Expenses
164,000
Bad debts
31,000
Carriage inward
38,000
Debenture Mark Up
40,000
Mark up on bank overdraft
19,000
Wages
832,000
Directors' Remuneration
210,000
General Expenses
154,000
Long Term Investments
340,000
Income from shares in related companies
36,000
Discount allowed & received
55,000
39,000
Profit on property sale
100,000
Building at cost
1,200,000
Plant And Machinery at cost
330,000
Motor Vehicles at cost
480,000
Provision for Depreciation: Building
375,000
Plant & Machinery
195,000
Motor Vehicles
160,000
Goodwill
40,000
Patents & Trade Marks
38,000
Trade Debtors & Creditors
864,000
392,000
Bank Overdraft
21,000
Debenture 10%
400,000
Total
7,933,000
7,933,000
Notes:
 Closing stock is valued at Rs. 103,000.
 Depreciate building @ 10%, Plant & Machinery @ 20% and Vehicles @ 25%.
 Provision for tax to be created Rs. 236,000.
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Financial Accounting (Mgt-101)
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You are required to prepare Financial Statements of ABC Limited as on June 30, 2002.
SOLUTION
Balance Sheet
ABC Limted
Balance Sheet As At June 30, 2002
Particulars
Note
Fixed Assets at WDV
3-a
1,090,500
Long Term Investments
340,000
1,430,500
Current Assets
Debtors
864,000
Stock in Trade
103,000
Goodwill
40,000
Patents & Trade Marks
38,000
1,045,000
Current Liabilities
Creditors
392,000
Provision For Tax
236,000
Bank Overdraft
21,000
649,000
Working Capital
396,000
Net Assets Employed
1,826,500
Financed By:
Authorized Capital
50,000 Shares of Rs. 10 each
1,500,000
Paid Up Capital
30,000 Shares of Rs. 10 each
1,200,000
Share Premium
75,000
General Reserve
150,000
Accumulated Profit and Loss Account
1,500
Debentures
400,000
Total
1,826,500
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Financial Accounting (Mgt-101)
VU
PROFIT AND LOSS ACCOUNT
ABC Limted
Profit and Loss Account for the Year Ending June 30, 20-2
Particulars
Note
Amount Rs.
Amount Rs
Sales
4,575,000
Less: Cost of Goods Sold
1
(3,865,000)
Gross Profit
710,000
Add: other income
2
175,000
Less: Administrative Expenses
3
803,500
Less: Financial Expenses
4
59,000
(862,500)
Profit before tax
22,500
Less: Provision for Tax
(236,000)
Profit after tax
(213,500)
Add: Accumulated Profit b/f
215,000
Net Profit Carried Forward
1,500
NOTES
Note # 1
Cost of goods sold
Opening Stock
902,000
Add: Purchases
2,196,000
Wages
832,000
Add: Carriage in
38,000
Less: Closing Stock
(103,000)
Total
3,865,000
Note # 2
Other Incomes
Income from shares in related companies
36,000
Discount received
39,000
Profit on property sale
100,000
Total
175,000
Note # 3
Administrative Expenses
Motor Expenses
164,000
Bad Debts
31,000
Directors' Remuneration
210,000
General Expenses
154,000
Depreciation
(Note # 3-a)
189,500
Discount allowed
55,000
Total
803,500
Fixed Assets at WDV
Note # 3-a
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Financial Accounting (Mgt-101)
VU
.
Acc. Dep
WDV
Cost
Rate
Opening
For the Yr.
Closing
Building
1,200,000
10%
375,000
82,500
457,500
742,500
Plant & Machinery
330,000
20%
195,000
27,000
222 000
108,000
240,000
240,000
Motor Vehicles
480,000
25%
160,000
80,000
189,500
1,090,500
Financial Expenses
Note # 4
Debenture Mark up
40,000
Mark up on Bank Overdraft
19,000
Total
59,000
256
Table of Contents:
  1. Introduction to Financial Accounting
  2. Basic Concepts of Business: capital, profit, budget
  3. Cash Accounting and Accrual Accounting
  4. Business entity, Single and double entry book-keeping, Debit and Credit
  5. Rules of Debit and Credit for Assets, Liabilities, Income and Expenses
  6. flow of transactions, books of accounts, General Ledger balance
  7. Cash book and bank book, Accounting Period, Trial Balance and its limitations
  8. Profit & Loss account from trial balance, Receipt & Payment, Income & Expenditure and Profit & Loss account
  9. Assets and Liabilities, Balance Sheet from trial balance
  10. Sample Transactions of a Company
  11. Sample Accounts of a Company
  12. THE ACCOUNTING EQUATION
  13. types of vouchers, Carrying forward the balance of an account
  14. ILLUSTRATIONS: Ccarrying Forward of Balances
  15. Opening Stock, Closing Stock
  16. COST OF GOODS SOLD STATEMENT
  17. DEPRECIATION
  18. GROUPINGS OF FIXED ASSETS
  19. CAPITAL WORK IN PROGRESS 1
  20. CAPITAL WORK IN PROGRESS 2
  21. REVALUATION OF FIXED ASSETS
  22. Banking transactions, Bank reconciliation statements
  23. RECAP
  24. Accounting Examples with Solutions
  25. RECORDING OF PROVISION FOR BAD DEBTS
  26. SUBSIDIARY BOOKS
  27. A PERSON IS BOTH DEBTOR AND CREDITOR
  28. RECTIFICATION OF ERROR
  29. STANDARD FORMAT OF PROFIT & LOSS ACCOUNT
  30. STANDARD FORMAT OF BALANCE SHEET
  31. DIFFERENT BUSINESS ENTITIES: Commercial, Non-commercial organizations
  32. SOLE PROPRIETORSHIP
  33. Financial Statements Of Manufacturing Concern
  34. Financial Statements of Partnership firms
  35. INTEREST ON CAPITAL AND DRAWINGS
  36. DISADVANTAGES OF A PARTNERSHIP FIRM
  37. SHARE CAPITAL
  38. STATEMENT OF CHANGES IN EQUITY
  39. Financial Statements of Limited Companies
  40. Financial Statements of Limited Companies
  41. CASH FLOW STATEMENT 1
  42. CASH FLOW STATEMENT 2
  43. FINANCIAL STATEMENTS OF LISTED, QUOTED COMPANIES
  44. FINANCIAL STATEMENTS OF LISTED COMPANIES
  45. FINANCIAL STATEMENTS OF LISTED COMPANIES