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.

Financial Statements of a Company

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
(4)	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
(2)	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.	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.

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%.

(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:-
1.	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

(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
		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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