The following is the trial balance on June 30, 2006 of the Modern Manufacturing Company Ltd.
Stock, on June 30, 2006 Rs 8,200. You are required to make out the trading account, and profit and loss account for the year ended June 30, 2006 and the balance sheet as on the date. You are also to make provision in respect of the following:
(i) Depreciate machinery @ 10% per annum;
(ii) Reserve 5% for discount on debtors;
(iii) One month rent Rs 45 was due on 30th June; and
(iv) Six month's insurance, included in general expenses, was unexpired at Rs 75.
Modern Manufacturing Company Ltd.
Note: It has been assumed that the Dividend Paid, August, 2005 of Rs 500 has been declared and paid in the same accounting period.
The following is the trial balance of Alfa Ltd., for the year ended June 30, 2005
Prepare the Profit and Loss Account and Balance Sheet of the company after taking the following particulars into consideration:
a) The original cost of land and building plant and machinery and furniture and fittings was Rs 2,50,000, Rs 6,00,000 and Rs 60,000 respectively. Additions during the year were: Building Rs 50,000 and Plant Rs 20,000.
b) Depreciation is to be charged on plant and machinery and furniture and fitting at 10 per cent on original cost.
c) Of the sundry debtors, Rs 10,000 is outstanding for a period exceeding 6 months, Rs 5,000 are considered doubtful, while the others are considered good.
d) The directors are entitled to a commission at 1 percent of the net profits before charging such commission.
e) Stock on 30th June, 2005 is Rs 1,30,000.
f) Provide Rs 34,800 for income tax
Balance Sheet as on June 30, 2005
The following balances appeared in the books of Parasuram Flour Mills Ltd., as on December 31, 2005 :
Prepare the company's trading and profit and loss account for the year and balance sheet as on December 31, 2005 after taking the following adjustments into account:
(a) Stock on December 31, 2005 were: Wheat at cost, Rs 14,900: Flour at market price, Rs 21,700;
(b) Outstanding expenses: Manufacturing expenses, Rs 23,500; and salaries and wages, Rs 1,200;
(c) Provide depreciation : Building at 2% ; Plant and machinery at 10%: Furniture at 10% ; and Vehicle 20%.
(d) Interest accrued on Government Securities, Rs100:
(e) A tax provision of Rs 8,000 is considered necessary.
(f) The directors propose a dividend of 20%.
(g) The authorised capital consists of 12,000 equity shares of Rs 10 each of which 7,200 shares were issued and fully paid up.
Parasuram Flour Mills Ltd.
An unexperienced accountant prepared the following trial balance of Bang Vikas Ltd., for the year ending 31.12.2005. The cash in hand on 31.12.2005 was Rs 750.
After locating the mistakes and making the following adjustments prepare trading and profit and loss account and balance sheet in the prescribed form.
(i) Stock on 31.12.2005 Rs 95,000 and
(ii) Write-off preliminary expenses.
Bang Vikas Ltd
The Silver Ore Co. Ltd. was formed on April 1, 2005 with an authorised capital of Rs6,00,000 in shares of Rs 10 each. Of these 52,000 shares had been issued and subscribed but there were calls in arrear on 100 shares @ Rs 2.50. From the following trial balance as on March 31, 2006 prepare the trading and profit and loss account and the balance sheet:
(i) Depreciate plant and railways by 10%; furniture and building by 5%;
(ii) Write off a third of the promotion expenses;
(iii) Value of silver ore on March 31, 1969 Rs 15,000, The directors forfeited on December 20, 1968, 100 shares on which only Rs 7.50 had been paid.
Silver Ore Co. Ltd.
|1. What are financial statements of a company?|
|2. What are the types of financial statements?|
|3. How are financial statements useful for decision-making?|
|4. How are financial statements prepared?|
|5. Why are financial statements important for investors?|