Financial Statements of a Company – CA Foundation, CPT notes, PDF
This article is about the Company Accounts – Financial Statements of a Company for CA foundation CPT students. we also provide pdf file at the end.
Requirements & Formats for preparation of Final Accounts as per Companies Act
- Books of Account etc. Section 128: Every Co. shall keep at its registered office, books of account and other relevant books and papers and financial statement for every financial year which gives true and fair view of the state of affairs of the Co., including branches. It shall be kept on accrual basis and by double entry system. It can be maintained on electronic mode also. Such books of account & vouchers shall be maintained in good order for minimum 8 (eight) previous financial year.
- As per section 2(40) Financial Statement includes (i) Balance-sheet (ii) Profit & loss A/c (iii) Cash Flow Statement (iv) Statement of Changes in Equity (v) Explanatory Notes.
Note: One Person Co., Small Co., & Dormant Co. may not prepare Cash Flow Statement.
- As per section 2(41) Financial Year should be ending on 31st March every year.
- Balance Sheet should be in the Vertical Form given in Part-I of Schedule III to the Companies Act, 2013 [u/s. 129(1)]
- Profit & Loss Account should be in the Vertical Form given in Part-II of Schedule-Ill [u/s. 129(1)]
An operating cycle is the time between acquisition of asset for processing and their realisation in cash. Where the normal operating cycle cannot be identified, it is assumed to have a duration of 12 months.
SCHEDULE III
Applicable for Financial year commencing on or after 1.4,2014
Important Points
Sr. No. | Points | Requirements of Schedule-Ill | |||||
1. | Schedule III vs. Accounting Standard who overrides the other | Accounting standard overrides Schedule III as far as recognition, measurement, classification and presentation are concerned. But disclosure requirement in Schedule LU and Companies Act are in addition to what is required by Accounting Standard. | |||||
2. | Parts of Schedule III: Contents | I. Balance-sheet: Vertical only. II. Statement of Profit and loss | |||||
3. | Balance-Sheet | Vertical (or top to bottom) Asset – liability, classified in to current non-current | |||||
4. | Statement of Profit & Loss | Vertical format Expenses classified nature wise. Multiple step format | |||||
5. | Current Asset includes (If it satisfies any of this criteria) | a. expected to be realized, sold or consumed in the Co’s normal operating cycle or b. held primarily for trading c. expected to be realized within 12 months after the reporting date d. cash & cash equivalent. | |||||
6. | Non-current Asset | All assets Other than above are non-current asset. | |||||
7. | Current Liability includes (If it satisfies any of this criteria) | a. expected to be settled in the Co’s normal operating cycle b. held primarily for trading c. due to be settled within 12 month after the reporting date d. Co. doesn’t have an unconditional right to defer settlement atleast for 12 months after the reporting date. | |||||
8. | Non-current Liability | All liabilities Other than above are non-current liability. | |||||
9. | Materiality | Item of Income or Expense exceeding 1% of Revenue from operation or Rs. 1,00,000 whichever is higher disclosed separately. | |||||
10. | Unit of Measurement Turnover less than Rs. 100 crore Turnover Rs. 100 crore or more | May be rounded off as below: In hundreds or thousands or lakhs or millions or decimals thereof In lakhs, millions or crores or decimals thereof. | |||||
11. | Details presented in Notes to Accounts | Narrative descriptions, details & break-ups be given in Notes to Accounts | |||||
12. | Balance-sheet & Profit & Loss items be cross referenced | Be cross referenced to information in notes to Account | |||||
13. | Contingent liabilities (not to be recognised) | Disclosed in notes as: Claims against company, Guarantees, Others | |||||
14. | Commitments (not to be recognised) | Disclosed in notes as: Contracts remaining to be executed on capital commitment, Uncalled liability on partly paid shares & investments held, Other commitments. | |||||
15. | Debit balance in P&L a/c | Deduct from surplus even if net result is negative & show in Reserves & Surplus in balance sheet. | |||||
16. | Miscellaneous Expenditure to the extent not written off. | No separate line item in Schedule DI. But as Accounting Standard requires deferral of certain expenses, this head can be created. As per Guidance Note show in other current or non-current asset depending upon the period of amortisation. Expenses deferral of which is not in accordance with Accounting Standard shall be adjusted surplus. | |||||
17. | P&L Appropriations: Dividend, transfer to reserves etc | Shown in Surplus in Balance sheet. No separate appropriation in or below Profit & Loss account. | |||||
18. | Proposed Dividend | No requirement to show in balance sheet/Profit & Loss account. Only disclosure in notes to accounts required. | |||||
19. | Recognition of dividends declared by subsidiary companies | No separate mention, hence dividends declared by subsidiary companies will be recognized as per AS 9 on same criteria as applicable to dividends declared by other companies. | |||||
20. | Money received against share warrants | Separate disclosure as part of shareholders funds in Balance sheet. | |||||
21. | Share Application Money received, Pending allotment | Refundable portion is shown as other Current Liability and Balance is shown separately from equity. | |||||
22. | Disclosure of Share option outstanding account. | To be disclosed as part of reserves & surplus. | |||||
23. | Authorised Share capital | Number and amount be disclosed for each class of shares. | |||||
24. | Share forfeiture account balance | Shown in share capital | |||||
25. | Securities convertible into equity/ preference shares | Terms of issue and dates of conversion in descending order from oldest to the latest date be disclosed in share capital. | |||||
26. | Disclosures of shares in the company held by company’sholding company/ ultimate holding company | Disclosure required. It seems that auditor will have to verify these disclosures. He cannot accept the disclosures as certified by management. | |||||
27. | Disclosure of calls unpaid | Calls unpaid by directors and officers to be shown distinctly | |||||
28. | Disclosures regarding (i) shares allotted for’ consideration other than cash, (ii) bon us shares allotted and (iii) shares bought back | A company shall, inter alia, disclose in the notes to accounts the following for the period of five years immediately preceding the date as at which the Balance Sheet is prepared: (For example in Balance-sheet as on 31.03.2015 disclose following which took place between 1.4.2010 to 31.3,2015) Aggregate number and class of shares: ♦ allotted as fully paid up pursuant to contract(s) without payment being received in cash. ♦ allotted as fully paid up by way of bonus shares. ♦ bought back. | |||||
29. | Disclosure of a reconciliation of the number of shares outstanding at the beginning and at the end of the reporting period | Disclosure required in notes to account. | |||||
30. | The rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and the repayment of capital. | Disclosure required in notes to account. | |||||
31. | Shares in the company held by each shareholder holding more than 5 per cent shares specifying the number of shares held | Disclosure required in notes to account. | |||||
32. | Loans (Liability) | Classified as long term & short term and then secured & unsecured. Loans from related parties be disclosed separately. Amount of loans guaranteed by directors or others be disclosed. Current maturities i.e. instalment due within 12 month out of long term loans & leases are shown in other current liability. Similarly unpaid matured deposits & unpaid matured debenture together with interest thereon be shown in other current liability. | |||||
33. | Period and amount of continuing default in long term loans as on the Balance-sheet date. | Requires disclosure separately. In case of short term borrowings the word used is default instead of continuing default. | |||||
34. | Interest accrued and due Interest accrued but not due | Shown as other Current Liability Shown as other Current Liability | |||||
35. | Fixed Assets (tangible as well as intangible) | Should be shown at original cost & net carrying amount at the beginning as well as at the end giving additions, deletions, depreciation/amortisation etc.. | |||||
36. | Profit on Revaluation of Fixed Assets. | Should be credited to Revaluation Reserve A/c & treated like a Capital Reserve. | |||||
37. | Classification of intangible assets | Classification shall be given as: (a) Goodwill. [b) Brands/trade marks. (c) Computer software. (<7) Mastheads and publishing titles. (e) Mining rights. (f) Copyrights, and patents and other intellectual property rights, services and operating rights. (g) Recipes, formulae, models, designs and prototypes. (h) licenses and franchise. (i) Others (specify nature). | |||||
38. | Capital Advances | Shown as Long Term Loans & Advances | |||||
39. | Long term & Short term loans & advances, Other non-current asset, and Trade receivable | Should be sub-classified as secured good, unsecured good and debts considered doubtful and less allowances for Bad & Doubtful debts. | |||||
40. | Debts (Long term loans & advances, other non-current asset, Trade receivable & Short term loans & advances) due by directors or officers | Disclose separately dues by directors or officers of the company severally or jointly with any other person or by firms or private companies in which any director is a partner or a director or a member. | |||||
41. | Long term & Short term loans & advances to related parties. | Disclose separately. | |||||
42. | For Current as well as non-current investment. | Disclosure in notes should be made of Aggregate amount & market value of quoted investment, Aggregate amount of unquoted investment and aggregate amount of provision made for diminution. | |||||
43. | Non-current Investment. | Carried at other than cost and basis of valuation shall be disclosed separately. | |||||
44. | For current investment | Basis of valuation of individual investment shall be disclosed. | |||||
45. | Trade receivable should be classified as: | More than 6 months old from the date they became due for payment Other debts. | |||||
46. | Bills receivables and Bills payable drawn/accepted on account of trade transactions | Should be included in trade receivable and trade payable. Other bills receivable may be shown in Short term loans & advances or Other current assets. Other bills payable should be shown in other current liability. | |||||
47. | Disclosure of cheques on hand an d drafts on hand | Distinct disclosure required as part of “Cash and cash equivalents”. | |||||
48. | Bank Deposits with over 12 months maturity, Earmarked bank balances, Bank balance held as margin money & held security against borrowings etc. | Shown Separately in cash and cash equivalent. | |||||
49. | Revenue from Operation in case of a Finance company | Shall include revenue from: Interest Other financial services | |||||
50. | Revenue from Operation in case of Other company | Shall include revenue from: Sale of products, Sale of services, Other operating revenues Less: Excise duty | |||||
51. | Other income shall include | Interest income, Dividend income, Net gain/loss on sale of investments, Other non-operating income (net of directly attributable expense) | |||||
52. | Following break-up of Finance Cost should be given: | Interest Expense | xxx | ||||
Other borrowing cost | xxx | ||||||
Applicable net gain/loss on foreign currency transaction/translation | xxx | ||||||
A company shall disclose by way of notes additional information regarding aggregate expenditure and income on the following items:- | |||||||
53. | Employee Benefits Expenses | Showing separately (i) salaries and wages, (ii) contribution to provident and other funds, (iii) expense on Employee Stock Option Scheme (ESOP) and Employee Stock Purchase Plan (ESPP), (iv) staff welfare expenses. | |||||
54. | Payment to Auditors should be shown under following details: | As Auditor for Taxation matters for Company taw matters for Management Services for Other services for reimbursement of expenses | |||||
55. | Gain/loss on foreign exchange transaction | To the extent considered as finance cost be shown in finance cost in P&L, other part be shown in other income or other expense as the case may be. | |||||
56. | Expenditure on each of the following item, separately for each item | Consumption of stores & spare parts, Power & Fuel, Rent, Repairs to building, Repairs to machinery, Insurance, Rates & taxes, Miscellaneous expenses. | |||||
57. | Items of Extraordinary nature and Exceptional items | Should be shown separately in P & L A/c and details be given in notes. | |||||
58. | Prior period items | Should be shown separately in the notes and can be shown in other income/other expense as the case may be in P & L a/c. | |||||
59. | Amount transferred to Reserves & withdrawn from Reserves | Shall be disclosed. | |||||
60. | Amount transferred to Provisions & withdrawn from Provisions as no longer required. | Shall be disclosed. | |||||
61. | Dividend from subsidiary company & provision for losses of subsidiary company | Shall be disclosed. | |||||
62. | In case of manufacturing companies | Disclose under broad heads: Raw material & Goods purchased. | |||||
63. | In case of trading companies | Disclose under broad heads: Purchases of Goods traded. | |||||
64. | In case of service companies | Disclose under broad heads: Gross income derived from rendering or supply of services. | |||||
65. | In case of companies which falls under more than one of the above categories | Disclose under broad heads: purchase, sale & consumption of raw material and Gross income from rendering of services. | |||||
66. | In case of other companies | Disclose under broad heads: Gross income derived. | |||||
67. | In case of all companies | Work-in-progress under broad heads | |||||
68. | Value of Imports calculated on CIF basis | In respect of Raw materials, Component & spare parts and Capital goods. | |||||
69. | Expenditure on foreign currency | On account of royalty, know-how, professional & consultation fees, interest and other matters. | |||||
70. | Value & percentage of consumption of imported & indigenous | Raw material, spare parts & components | |||||
71. | Remittance in foreign currencies on account of dividend | Mention total number of non-resident share-holders and number of shares held by them and the year to which dividend relates. | |||||
72. | Earning in foreign exchange classified under the following heads | Export of goods calculated on FOB basis. Royalty, know-how, professional & consultation fees. Interest & dividend Other income indicating the nature thereof. | |||||
PART I
BALANCE SHEET
Name of the Company ……….
Balance Sheet as at ……….
(Rupees in ……….)
Particulars | Note No. | Figures as at the end of the current reporting period | Figures as at the end of the previous reporting period | ||
1 | 2 | 3 | 4 | ||
I. | EQUITY AND LIABILITIES | ||||
(1) | Shareholders’ funds (c) Share capital (b) Reserves and surplus (c) Money received against share warrants | ||||
(2) | Share application money pending allotment | ||||
(3) | Non-current liabilities (a) Long-term borrowings (b) Deferred tax liabilities (Net) (c) Other long term liabilities (d) Long-term provisions | ||||
(4) | Current liabilities (a) Short-term borrowings (b) Trade payables (c) Other current liabilities (d) Short-term provisions | ||||
TOTAL | |||||
II. | ASSETS | ||||
(1) | Non-current assets (a) Fixed assets (i) Tangible assets (ii) Intangible assets (iii) Capital work-in-progress (iv) Intangible assets under development (b) Non-current investments (c) Deferred tax assets (net) (d) Long-term loans and advances (e) Other non-current assets | ||||
(2) | Current assets (a) Current investments (b) Inventories (c) Trade receivables (d) Cash and cash equivalents (e) Short-term loans and advances (f) Other current assets | ||||
TOTAL |
PART II
FORMAT OF STATEMENT OF PROFIT AND LOSS
Name of the Company ………………..
Profit and loss statement for the year ended ………………..
Particulars | Note No. | Figures for the current reporting period | Figures for the previous reporting period | |
I. | Revenue from operations | … | … | |
II. | Other income | … | … | |
III. | Total Revenue (I + II) Expenses:- | … | … | |
IV. | ||||
Cost of materials consumed | … | … | ||
Purchases of Stock-in-Trade | … | … | ||
Changes in inventories of finished goods, work-in progress and Stock-in-Trade | ||||
Employee benefits expense | ||||
Finance costs Depreciation and amortization expenses Other expenses | ||||
V. | Total Expenses | |||
VI. | Profit before tax (III-V) | … | … | |
VII. | Tax expense | … | … | |
VIII. | Profit (Loss) for the period (V-VI) | … | … |
ILLUSTRATIONS
Illustration 25.1: R Ltd. was incorporated with a nominal capital of Rs. 5,00,000 in equity shares of Rs. 1 0 each. On 31st March, 2002 25,000 shares were fully called up. The following balances were extracted from the ledger of the company as on 31st March, 2002: ‘
Particulars | Rs. | Particulars | Rs. |
Stock | 50,000 | Advertisement | 3,800 |
Sales | 4,25,000 | Bonus | 10,500 |
Purchases | 3,00,000 | Debtors | 38,700 |
Wages (productive) | 70,000 | Creditors | 35,200 |
Discount allowed | 4,200 | Plant & Machinery | 80,500 |
Discount received | 3,150 | Furniture | 17,100 |
Insurance up to 30.6.2002 | 6,720 | Cash at Bank | 1,34,700 |
Salaries | 18,500 | General Reserve | 25,000 |
Rent | 6,000 | The loan from managing director | 15,700 |
General expenses | 8,950 | Bad debts | 3,200 |
Profit and loss account | 6,220 | Calls in arrears | 5,000 |
Printing and Stationery | 2,400 |
Required:- Prepare Financial Statements for the year ended 31st March, 2002. The following further information is given to you:
(a) Closing stock was Rs.91,500.
(b) Depreciation is to be charged on plant and machinery and furniture at 15% and 10% respectively.
(c) Outstanding liabilities on 31st March, 2002 were:
Wages Rs.5,200; Salary Rs.1,200 and Rent Rs.600
(d) Dividend for the year ended 31st March, 2002@ 1% is to be provided.
(e) Make a provision for taxation @35% and for Corporate Dividend Tax @ 10%.
Solution 1:
Name of Company R Ltd.
Balance Sheet as at 31st March 2002
(Rupees in ……….)
Particulars | Note No. | Figures as at the end of the current reporting period | Figures as at the end of the previous reporting period | ||
I. EQUITY & LIABILITIES | |||||
1. Shareholders’ Funds | |||||
a. Share Capital | 1 | 2,45,000 | |||
b. Reserves and Surplus | 2 | 39,104 | |||
2. Non-current liabilities | — | ||||
3. Current liabilities | |||||
a. Short-term borrowings | 15,700 | ||||
b. Trade Payables | 35,200 | ||||
c. Other current liabilities | 3 | 7,000 | |||
d. Short-term provisions | 4 | 8,391 | |||
Total | 3,50,395 | ||||
II. ASSETS | |||||
1. Non-Current Assets | |||||
a. Fixed Assets | 5 | 83,815 | |||
2. Current Assets | |||||
a. Inventories | 91,500 | ||||
b. Trade Receivables | 38,700 | ||||
c. Cash and Cash equivalents | 1,34,700 | ||||
d Short-term Loans and advances | 1,680 | ||||
Total | 3,50,395 | ||||
Statement of Profit and loss for the year ended 31st March, 2002
Particulars | Note No. | Figures for current reporting period | Figures for the previous reporting period | |
1 | Revenue from operations | 4,28,150 | ||
2 | Other income | – | ||
TOTAL REVENUE (1 + 2) | 4,28,150 | |||
3 | Expenses:- | |||
(a) Cost of Materials Consumed | 6 | 2,58,500 | ||
(b) Employee benefits expense | 7 | 1,05,400 | ||
(c) Depreciation and amortisation expenses | 8 | 13,785 | ||
(d) Other expenses | 9 | 34,190 | ||
TOTAL EXPENSES | 4,11,875 | |||
Profit before tax | 16,275 | |||
Less: Provision For Taxation | (5,696) | |||
Profit after tax | 10,579 |
Notes to Accounts:-
- Shareholder’s Fund
50,000 Shares of Rs.10 each | 500000 | ||||||
Issued & Subscribed Capital- | |||||||
25,000 Shares of Rs.10 each | 250000 | ||||||
Less: Calls in arrears | (5000) | 245000 | |||||
2. | Reserves & Surplus | ||||||
General Reserve | 25000 | ||||||
Surplus from Statement of P & L:- | |||||||
Net profit of the year | 10579 | ||||||
Add:- Balance of Last year | 6220 | 16799 | |||||
Less:- Proposed Dividend | (2450) | ||||||
Corporate Dividend Tax | (245) | (2695) | 14104 | 39104 | |||
3. | Other Current Liabilities | ||||||
Wages | 5200 | ||||||
Salary | 1200 | ||||||
Rent | 600 | 7000 | |||||
4. | Short term-Provisions | ||||||
Provision for taxation | 5696 | ||||||
Proposed dividend CDT | 2450 | ||||||
245 | 8391 | ||||||
5. | Fixed Assets | ||||||
(a) Tangible Assets:- | |||||||
Plant & Machinery | 80500 | ||||||
Less:-Depreciation @15% | (12075) | 68425 | |||||
Furniture | 17100 | ||||||
Less:-Depreciation @10% | (1710) | 15390 | 83815 | ||||
6. | Cost of Material Consumed | ||||||
Opening Stock | 50000 | ||||||
Purchases | 300000 | ||||||
Closing Stock | (91500) | 258500 | |||||
7. | Employee benefit Expenses | ||||||
Wages | 70000 | ||||||
O/S wages | 5200 | 75200 | |||||
Salary | 18500 | ||||||
O/S Salaries | 1200 | 19700 | |||||
Bonus | 10500 | 105400 | |||||
8. | Depreciation and amortisation expenses | ||||||
Depreciation on Plant | 12075 | ||||||
Depreciation on Furniture | 1710 | 13785 | |||||
9. | Other Expenses | ||||||
Discount Allowed | 4200 | ||||||
Rent | 6000 | ||||||
O/S Rent | 600 | 6600 | |||||
Advertisement | 3800 | ||||||
Bad Debts | 3200 | ||||||
General Expenses | 8950 | ||||||
Printing & Stationery | 2400 | ||||||
Insurance | 6720 | ||||||
Unexpired Insurance | (1680) | 5040 | 34190 | ||||
Illustration 25.2
The following is the Trial Balance of M Ltd. as on 31st March, 2002:
Particulars | Rs. | Particulars | Rs. |
Stock as on 1.4.2001 | 75,000 | Purchase returns | 10,000 |
Purchases | 2,45,000 | Sales | 3,40,000 |
Wages | 30,000 | Discount | 3,000 |
Carriage | 950 | Profit and loss A/c | 15,000 |
Furniture | 17,000 | Share Capital | 1,00,000 |
Salaries | 7,500 | Creditors | 17,500 |
Rent | 4,000 | General reserve | 15,500 |
Sundry Trade Expenses | 7,050 | Bills payable | 7,000 |
Dividend paid | 9,000 | ||
Corporate dividend Tax | 900 | ||
Debtors | 27,500 | ||
Plant & Machinery | 29,000 | ||
Cash at bank | 45,300 | ||
Patents | 4,800 | ||
Bills Receivable | 5,000 | ||
5,08,000 | 5,08,000 |
Required:- Prepare Statement of Profit and Loss for the year ended 31st March, 2002 and Balance Sheet as on that date after considering the following adjustments in Financial Statements of a Company:
(a) Stock as on 31st March, 2002: Rs. 88,000
(b) Provide for income-tax @ 35% and for Corporate Dividend Tax @ 10%.
(c) Depreciate plant and machinery at 15%; furniture at 10% and patents at 5%.
(d) On 31st March, 2002 outstanding rent amounted to Rs. 800 and salaries Rs. 900.
(e) The Board recommends payment of a dividend @ 1596 per annum.
(f) Provide Rs. 510 for doubtful debts.
(g) Provide for managerial remuneration Rs. 6,351.
(b) Transfer 5% of current profits to reserve.
Solution:
Name of the Company M Ltd.
Balance Sheet as at 31st March, 2002
(Rupees in ……….)
Particulars – | Note No. | Figures as at the end of current reporting period | Figures as at the end of previous reporting period | |
I. EQUITY & LIABILITIES | ||||
1. Shareholders’ Funds | ||||
a. Share Capital | 1,00,000 | |||
b. Reserves and Surplus | 1 | 50,822 | ||
Non-current liabilities | — | |||
Current liabilities | ||||
a. Trade Payables | 2 | 24,500 | ||
b. Other current liabilities | 3 | 8,051 | ||
c. Short-term provisions | 4 | 26937 | ||
Total | 2,10,310 | |||
II. ASSETS | ||||
1. Non-Current Assets | ||||
a. Fixed Assets | ||||
i. Tangible assets | 5i | 39,950 | ||
ii. Intangible assets | 5ii | 4,560 | ||
2. Current Assets | ||||
a. Inventories | 6 | 88,000 | ||
b. Trade Receivables | 32,500 | |||
c. Cash and Cash Equivalents | 45,300 | |||
d. Short-term Loans and advances | ||||
Total | 2,10,310 |
Statement of Profit and Loss for the year ended 31st March, 2002
Particulars | Note No, | Figures for current reporting period | Figures for the previous reporting period | |
1 | Revenue from Operations | 3,43,000 | ||
2 | Other income | — | ||
3 | TOTAL REVENUE (1 +2) | 3,43,000 | ||
4 | Expenses:- | |||
(a) Cost of Materials Consumed | 7 | 2,22,000 | ||
(b) Employee Benefits Expense | 8 | 44,751 | ||
(c) Depreciation and amortisation expenses | 9 | 6,290 | ||
(d) Other expenses | 10 | 13,310 | ||
5 | TOTAL EXPENSES | 2,86,351 | ||
6 | Profit Before Tax | 56,649 | ||
Less: Provision for Taxation | 19,827 | |||
Profit after Tax | 36,822 |
Notes to Accounts:-
1. | Reserves & Surplus:- | ||||
General Reserve (15,500 + 1,841) | 17,341 | ||||
Surplus from Statement of P&L:- | |||||
Net profit of the year | 36,822 | ||||
Add: Balance of Last Year | 15,000 | 51,822 | |||
Less: General Reserve | |||||
(5% of 36,822) | (1,841) | ||||
Dividend paid | (9,000) | ||||
Proposed Dividend | (6,000) | ||||
Dividend Dist.Tax | (1,500) | (18,341) | 33,481 | 50,822 | |
2, | Trade Payables:- | ||||
B/P | 7,000 | ||||
Creditors | 17,500 | 24,500 | |||
3. | Other Current Liabilities | ||||
O/S Rent | 800 | ||||
O/S Salaries | 900 | ||||
O/S Managerial Remuneration | 6,351 | 8,051 | |||
4. | Short term-Provisions:- | ||||
Proposed dividend | 6,000 | ||||
Provision for taxation | 19,827 | ||||
CDT | 600 | ||||
Provisions for B.D.D | 510 | 26,937 |
5. | Fixed Assets | ||||
i. Tangible Assets:- | |||||
Plant & Machinery | 29,000 | ||||
Less: Depreciation @15% | 4,350 | 24,650 | |||
Furniture | 17,000 | ||||
Less: Depreciation @10% | (1,700) | 15,300 | 39,950 | ||
ii. Intangible Assets:- | |||||
Patents | 4,800 | ||||
Less: Amortisation @5% | (240) | 4,560 | |||
6. | Trade Receivables:- | ||||
Debtors | 27,500 | ||||
Bills Receivables | 5,000 | 32,500 | |||
7. | Cost of Material Consumed:- | ||||
Opening Stock | 75,000 | ||||
Purchases | 2,45,000 | ||||
Purchase Return | (10,000) | ||||
Closing Stock | (88,000) | 2,22,000 | |||
8. | Employee benefit Expenses:- | ||||
Wages | 30,000 | ||||
Salaries | 7,500 | ||||
O/S Salaries | 900 | ||||
O/S Managerial Remuneration | 6,351 | 44,751 | |||
9. | Depreciation and amortisation expenses:- | ||||
Depreciation on Plant | 4,350 | ||||
Depreciation on Furniture | 1,700 | ||||
Amortisation on Patents | 240 | 6,290 | |||
10. | Other Expenses:- | ||||
Carriage | 950 | ||||
Rent | 4000 | ||||
O/S Rent | 800 | 4,800 | |||
Sundry Trade Expenses | 7,050 | ||||
Provision for Bad Debts | 510 | 13,310 |
Illustration 25.3: S Ltd. was registered with a nominal capital of Rs.5,00,000 divided into shares of Rs.100 each. The following Trial Balance is extracted from the books on 31st March, 2002:
Particulars | Rs. | Particulars | Rs. | |
Buildings | 2,90,000 | Sales | 5,20,000 | |
Machinery | 1,00,000 | Salaries Outstanding | 2,000 | |
Closing Stock | 90,000 | Provision for Doubtful Debt | 3,000 | |
Purchases (adjusted) | 2,10,000 | (1-4-2001) | 2,00,000 | |
Salaries | 60,000 | Share Capital | 40,000 | |
Director Fees | 10,000 | General Reserve | 25,000 | |
Rent | 26,000 | Profit & Loss A/c (1-4-2001) | 92,000 | |
Depreciation | 20,000 | Creditors | ||
Bad Debts | 6,000 | Provision for depreciation: | ||
Interest accrued on Investment | 2,000 | On Building | 50,000 | 1,05,000 |
12,000 shares of AB Ltd. Rs.10 each, Rs.8 paid up | 1,20,000 | On Machinery | 55,000 | 2,00,000 |
Debenture Interest | 28,000 | 14% Debentures | ||
Loose Tools | 23,000 | Interest on Deb. accrued but not due | 14,000 | |
Advance Tax | 60,000 | Interest on Investments | 12,000 | |
Sundry expenses | 18,000 | Unclaimed dividend | 5,000 | |
Debtors | 1,25,000 | |||
Bank | 30,000 | |||
12,18,000 | 12,18,000 |
You are required to prepare Financial Statements for the year ending 31st March, 2002 after taking into consideration the following information:
(a) Closing stock is more than opening stock by Rs.80,000
(b) Provide for doubtful debts @ 4% on Debtors
(c) Make a provision for income-tax @35%
(d) Depreciation expense includes depreciation of Rs.8,000 on Building and that of Rs. 12,000 on Machinery.
(e) The directors recommend a dividend @ 25% (Assume Corporate Dividend Tax @ 10%) and to transfer 10% of current profits to reserve.
Solution 3.
Name of Company S Ltd.
Balance Sheet as at 31st March 2002
(Rupees in ……….)
Particulars | Note No. | Figures as at end of current reporting period | Figures as at the end of previous reporting period | |
I, EQUITY & LIABILITIES | ||||
1. Shareholders’ Funds | ||||
a. Share Capital | 2,00,000 | |||
b. Reserves and Surplus | 1 | 1,08,800 | ||
2. Non-current liabilities | ||||
α Long-term borrowings | 2,00,000 | |||
Current liabilities | ||||
cl Trade Payables | 2 | 92,000 | ||
b. Other current liabilities | 3 | 21,000 | ||
c. Short-term provisions | 1,13,200 | |||
Total | 7,35,000 | |||
II. ASSETS | ||||
1. Non-Current Assets | ||||
a. Fixed Assets | ||||
i. Tangible assets | 4 | 2,85,000 | ||
2. Current Assets | ||||
a. Current Investment | 1,20,000 | |||
b. Inventories | 5 | 1,13,000 | ||
c. Trade Receivables | 6 | 1,25,000 | ||
d. Short-term loans and advances | 60,000 | |||
e. Cash and Cash equivalents | 30,000 | |||
f. Other Current Assets | 2,000 | |||
Total | 7,35,000 |
Statement of Profit and loss for the year ended 31st March, 2002
Particulars | Note No. | Figures for current reporting period | Figures for the previous reporting period | |
1 | Revenue from Operations | 5,20,000 | ||
2 | Other income | 12,000 | ||
TOTAL REVENUE (1+2) | 5,32,000 | |||
3 | Expenses:- | |||
(a) Cost of Materials Consumed | 7 | 2,10,000 | ||
(b) Employee benefits expense | 8 | 70,000 | ||
(<?) Finance Cost | 28,000 | |||
(d) Depreciation and amortisation expenses | 20,000 | |||
(e) Other expenses | 9 | 52,000 | ||
TOTAL EXPENSES | 3,80,000 | |||
Profit before tax | 1,52,000 | |||
Less: Provision for Taxation | (53,200) | |||
Profit after tax | 98,800 |
Notes to Accounts:-
1. | Reserves & Surplus | ||||||
General Reserve Balance (40,000 + 9,880) | 49,880 | ||||||
Surplus from Statement of P&L:- | |||||||
Net profit of the year Add: Balance of Last Year Less: Transfer to Reserve | 98,800 25,000 | ||||||
1,23,800 | |||||||
(9,880) | |||||||
Proposed Dividend | (50,000) | ||||||
Corporate Dividend Tax | (5,000) | (64,880) | 58,920 | 1,08,800 | |||
2. | Other Current Liabilities | ||||||
O/S Salaries | 2,000 | ||||||
Interest on Deb. (accrued but not due) | 14,000 | ||||||
Unclaimed Dividend | 5,000 | 21,000 | |||||
3. | Short term-Provisions | ||||||
Proposed dividend @ 25% | 50,000 | ||||||
Provision for taxation @35% | 53,200 | ||||||
CDT @10% | 5,000 | ||||||
Provisions for B.D.D (@ 4%) | 5,000 | 1,13,200 | |||||
4. | Fixed Assets | ||||||
i. Tangible Assets:- | |||||||
Buildings | 2,90,000 | ||||||
Less: Depreciation reserve | (50,000) | 2,40,000 | |||||
Plant & Machinery | 1,00,000 | ||||||
Less: Depreciation reserve | (55,000) | 45,000 | 2,85,000 | ||||
5. | Inventories | ||||||
Loose Tools | 23,000 | ||||||
Closing Stock | 90,000 | 1,13,000 | |||||
6. | Trade Receivables:- | ||||||
Debtors | 1,25,000 | ||||||
7. | Cost of Material Consumed:- | ||||||
Opening Stock | 10,000 | ||||||
(+) Purchases | 2,90,000 | ||||||
(-) Closing Stock | (90,000) | 2,10,000 | |||||
8. | Employee benefit Expenses: | ||||||
Salaries | 60,000 | ||||||
Director Fees | 10,000 | 70,000 | |||||
9. | Other Expenses: | ||||||
Rent | 26,000 | ||||||
Bad Debts | 6,000 | ||||||
Provision for Bad Debts | 2,000 | ||||||
Sundry Trade Expenses | 18,000 | 52,000 | |||||
*This article contains all topics about the Financial Statements of a Company.
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