a 2ULUnume UL a LUyoUL Eure ACKNOWLEDGEMENT ‘1%? foge [would like to convey my thanks to Mr./Mrs./Ms. , my Accountancy teacher who always gave valuable suggestions and guidance for the completion of my project. He/She helped. me to understand and present important details of the project work in Accountancy. My project work has been completed only because of his/her guidance. Name of the student Roll No.: certivicars 3% P oe of Class Section of School, has completed his/her project under my supervision. He/She has taken proper care and shown utmost sincerity in completion of this project. This is to certify that Mr./Ms.| AL COMPREHENSIVE, PRo BLE Ms : Vishal Arora and Saurabh Das had been working in hospitalisation and aviation industry for 5 eats: Both intended to start their business, They decided to start a business of manufacturing, purchasing and selling furniture for home and office uses. On Ist April, 2016, they started their business under the name ‘Comfort Furniture House’ with a capital of % 22,50,000 which was contributed equally by both the partners. squrabh hired an accountant and asked him to prepare a partnership deed for the firm as per the terms and conditions agreed by both the partners. Vishal opened a bank account in a Bank on Ist April, 2016 by depositing %15,00,000 in it. Information and transactions related to their business are given as follows: (1) The partners took a premises on rent for setting their showroom. The monthly rent ofthe premises was €13,500. Rent for three months has been given on Ist April, 2016 in cash. (2) For establishing the showroom, he purchased the following items by cheques: | (i) Refrigerator 222,500 (ii) Air Conditioners 272,000 (ii) Furniture and Fixtures 337,500 (iv) Computers 354,000 | (¥) Office Equipments including Mobile phones 240,500 | @) They spent 224,000 on the interior decoration of the showroom by cheque. | (4) Foracquiring electricity ‘connection, %7,500 was given as security deposit to BSES Yamuna Power Limited. (8) 3,000 was given to Reliance Communications as security deposit for taking telephone connection for the showroom. For obtaining these connections, i.¢., electricity and phone, the payment is made, by cheque.(a) (B) aware about their ‘Comfort Furniture House’ by hoard; Tey, made Peo advertacment Expenses) which cost €40,50 and pay Cash. Oe en were in cash to be deposited in the bank on the same day, During the Year, the business recorded a good turnover. The partnership firm appointed three persons to help en in the showroom, Each employee receives a salary of € 10,500 per month during the year by cheque. At the end of the year, the position of their business showed the following: gs ang Ment was ®) Total Sales of furniture items made during the year 26,40,000 Total Purchases made during the year (payment by cheque) 20,25,000 The following expenses incurred during the year (in cash) oop Stationery 525 Periodicals and Magazine 1,200 Refreshment Expenses 5,400 Legal Expenses 2,250 Transportation charges 36,000 Maintenance charges 24,000 Insurance charges 2,700 Petty Expenses 4,800 Electricity charges 33,000 Internet Expenses 15,000 Telephone and Mobile charges 21,000 Miscellaneous Expenses 24,750 Rentofthe premises (per month) 13,500 You are required to Journalise the above transactions, Post them into led; On the basis of Trial Balance, prepared in part (A) statements of partnership firm of Vishal Arora an Undertake the following adjustments while (i) Closing stock at 31st March, 2017 & 6,7 gers and Prepare Trial Balance. , You are required to prepare financial id Saurabh Das. Preparing financial statements: 5,000. (ii) Depreciation should be charged on the fixed assets as follows: Furniture and Fixtures 20% p.a. Air Conditioners ea Computers se ee Refrigerator we Pe (ii 10% p.a. Outstanding stationery charges for the year 7900,(iv) Accrued Bank Interest 97,500. (v) Credit sales not recorded during the year %9,000. (vi) Credit purchases not recorded during the year 712,000. (vii) Debt of 71,050 proved bad during the year. (viii) On 31st March, 2017 an amount of 2 3,00,000 was transferred to the Fixed Deposit. (ix) Charge one fifth of the advertisement expenses to the Trading Account. (©) Youare also required to compute profitability and solvency ratios and comment upon the position on the basis of the following norms (Industry Standard): (i) Gross profit ratio — 40% (ii) Net profit ratio — 20% (ii) Return on capital employed — 22% (iv) Operating profit ratio — 22% (v) Operating ratio — 75% (vi) Current ratio — 2: 1 (vii) Quick ratio— 1:1 (viii) Proprietary ratio — 80% (ix) Fixed assets ratio — 0.45 : 1Cash Alc To Vishal Arora’s Capital A/c 11,25,000 To Saurabh Das's Capital A/c Being capital invested in business 11,25,000 Bank A/c To Cash A/c To Cash Alc Being rent for 3 months paid in advance,a Dr. ‘April | Air Conditioners A/c To Bank Alc (Being air conditioners purchased) 7 Apriit | Refrigerator Alc To Bank Alc ein jerator purchased) ; Apt erated Fixtures Alc or. 37,500 jank Alc | oungenountspenton uni and fares) | 57509 Aprit | Computers A/c a 54,000 Office Equipments A/c Pr 40,500 To Bank Alc : 84.59 (Being cash paid for computers and office equipments) ‘Aprii1 | Advertisement Expenses A/c Or. 40,500 To Cash Alc 4050) (Being amount paid for advertisement) Interior Decoration Expenses A/c Or. 24,000 To Bank A/c 240m (Being amount spent on interior decoration) Security Deposit (BSES) Or. 7,500 Security Deposit (Reliance Communications) Dr. 3,000 To Bank Alc 10,500 (Being amount paid as security deposit for electricity and telephone connections) 2017 | Bank Alc Dr. 26,40,000 March 31] To Sales Ac 26,40,000 (Being total sales made during the year) March 31 | Purchases Alc Dr. 20,25,000 To Bank A/c 20,25 000 (Being purchases made during the year) . March 31 | Stationery Alc Dr 525 Periodicals and Magazines Alc Dr. 1,200 To Cash Alc 478 (Being expenses paid for stationery. newspapers and magazines) March 31 | Refreshment Expensses Alc Oe 5,400 Legal Expenses A/c a 2,260 Petty Expenses Ale Dr 4,800 Transportation Charges Alc ay 36,000 Maintenance Charges A/c Ss 24,000 Insurance Charges A/c wi Dr. 2,700 Electricity Charges A/c a 33,000 Internet Expenses A/c Dr. 16,000 Telephone and Mobile Phone Charges Alc Di 21,000 | ail__——_—_—— ‘miscellaneous Expenses A/c Dr. To Cash Alc eae) Being expenses paid Rent A/c ch 34 Or. a To Cash Ac 421,600 (Being rent paid for 9 months) Norch 31 | Salaries Alc Dr. 3,78,000 To Bank A/c (Being salaries paid to the salesman) Dr Bank Account {pate Particulars: JF (®) | Date rticulars 216 2016 ‘April 1 To Cash Alc 45,00,000 | April 1. | By Air Conditioners A/c 2017 By Refrigerator A/c Mar. 31 To Sales Alc 26,40,000 By Furniture and Fixtures A/c By Computers A/c By Office Equipments A/c By Interior Decoration Expenses Alc 2017 | By Security Deposit (BSES) Mar. 31 By Security Deposit, (Reliance Comm.) By Purchases A/c By Salaries A/c By Balance cid 41,40,000 2017 Aprii1 | To Balance b/d 14,76,000 Dr. (Cash Account zs r [___@) | Date 2016 2016 April | To Vishar's Capital A/c 11,28,000 | Apa 1 | By Bank Ale ‘To Saurabh's Capital Alc 41:28,000 By Rent Ale 2017, By Advertisement Expenses Mar. 31 Alc By Stationery A/c By Periodicals and y er and Magazine By Refreshment Expenses A/c By Legal Expenses A/c . By Petty Expenses A/c By Transpor y Transporation Charges Ale leBy Insurance Charges Ac By Electricity Charges Ac M0 By Internet Expenses Alc 0, By Telephone and Mobile 15.009 Phone Charges A/c 219 By Miscellaneous Expenses Ac 275 By Rent Alc (13,5009) By Balance cid 2016 April 1 By Cash Alc 11,25,000 | 11.25.09 |__| 11,25,000| 11250 2017 1 | By Balance b/d 41,25,000 | 14 April y Bal 25000] Dr. Air Conditioners Account Ce Date _| Particulars JE. @| Date ___| Particulars JE “al 2016 2017 April 1 | To Bank Alc 72,000 | Mar. 31 | By Balance c/d |_ 720%] 72,000 |__ 7200) 2017 ‘April t | To Balance bid 72,000 Dr. Refrigerators Account c | = | Date_| Particulars JF. @)| Date _| Particulars oF, a) 2016 2017 April4 | To Bank Alc 22,500 | Mar. 31. | By Balance cid 22,500 2017 April 1 | To Balance bid 22.500 [ Furniture and Fixtures AccountComputers Account particu (8) | Date | Partie 2017 Ac 54, To Bank 000 | Mar. 31 | By Balance ald 54,000 54,000 | 54,000 | ot at To Balance bid 54,000 a . Office Equipments Account Cr T (we eee, JF @) | Date | Particulars JF. © 6 2017 at |? Bank A/c 40,500 | Mar. 31 | By Balance old 40,500 40,500 40,500. int? yat_|To Balance bid 40,500 Dt Advertisement Expenses Account Cr. Particulars JF. Date _| Particulars JF. (ple ®) ® nt6 2017 E iwi | To Cash Alc 40500) Mar. 31 | By Tang and Prot & Loss 40,500 Ic 40,500 40,500 | Ss bh Rent Account Cr tate _| Particulars JF. iq | ate _ | Particulars ar. @ : o- ‘6 2017 ‘ tori | To Cash Alc 40,500 | Mar. 34 By Trading and Profit & Loss 1,62,000 as7 Mat.31 | To Cash Alc 1,21,500 4,62,000 1,62,000 b, Interior Decoration Expenses Account Cr {Bow [Particulars OF. “@)| Date | Particulars ata @| 2016, | 2017 ing and Profit & Loss 24,000 Meri | To Bank Alc 24,000 | Mar. 31 | By Trading and Pro 24,000 24,000Dr. Security Deposit. Account = ae ‘Date _| Particulars Date _| Particulars Ay By Balance cid ‘April | To Bank Alc (BSES) To Bank Alc (Reliance 3,000 Comm.) 40,500 2017 April | To Balance b/d 10,500 Dr. Purchases Account : : a Date _| Particulars JF. (®)| Date _| Particulars eer Mer a i Profit & Mar. 31 | % Bank Ale 20,25,000| Mar. 91 | BY Trading and Prof & Loss 202510 20,25,000, aa Dr. Sales Account @ Date Particulars. wr @| Dato | Particulars ear 2017 Mar. 31 | To Trading and Profit & 26,40,000 | Mar. 31. | By Bank Alc Loss A/c 26,40,000 = Stationery Account [Date | Particulars. ray e Rare +2F +) | vate [Particulars 2017 Cait Mar. 31. | 76 Cash Alc 5285 | Mar. 31 By Trading and Profit and Loss A/c 525 [aS arte Maen Accum Prana eG 2017 ae Particulars Mar. 31 | To Cash A le 1,200 | Mar. 31 | By Trading and Proft and Loss Alc 1,200 Dr. P= Refreshment Account Date | Particulars lox ee 2017 31 | To Cash Ale 2017 5,400 | Mar. 31. | By Trading and Profit & Loss r— Alc 5,400 feegal Expenses Account Petty Expenses Account nt 31 | To Cash Ale 4,800 By Trading and Proft & Loss| 4,800 | Nc 4,800 4 be ‘Transportation Charges Account p= Partoviors oF. @|bate | Particulars Met. 31 | To Cash Alc 36,000 | war. 31 | By Trading and Profit & Loss| 36,000 Ale 36,000 36,000 3 Maintenance Account Cr. (Date | Particulars JF ®)| Date © | Particulars: orl & 217 2017 000 Mar.31 | To Cash Alc 24,000 | Mar. 31] By Trading and Profit and Loss Alc 2a\ 24,000, 24.000 Dr. Insurance Charges Account Cr. eto _| Particutare of | ° (| ate Particulars, | ar. ® 2017 2017 Mar. 31. | To Cash Alc 2,700 | Mar, 31. | By Trading and P & LAlc 2.700. 2,700 2,700 te WE ee arges Account Cr. Date. 2 Rana 2017 Mar. 31 | By Trading and Profit & Loss AeDr. Internet Expenses Account Ls By Trading and Profit and Loss Ac Mar. 31 | To Cash Alc il es Account Dr Telephone and Mobile Charg : 3 “ThE @ | Date ict ue) Particulars ay ——— | onl 2017 Pi [2 2017 21,000 | Mar. 31. | By Trading and Profit & Loss : Mar. 31 | To Cash Alc Alc 1,009 21,000 Er — Miscellaneous Expenses Account : Dr. outs ilar Date | Particulars JF. @) | Date Particulars JF, z ome [ att Trading and Profit and Loss Ai By Trading and Profit and Loss A/c| Mar. 31 | To Cash Alc 24,750 | Mar. 31. | By Trading 2475) 24,750 Lara Ea Dr. Salaries Account eS _— [rrr JF. @) {Date | Particulars OF. . 2017 2017 Mar. 31 | To Bank Ale 3,78,000 | Mar. 31 | By Trading and Profit & Loss| 3.78.00 Ac — |_3.78.000 | 3.78000 Trial Balance pr Lorthe year ended on 31st March, 2017 Ce a3 ¥ Particulars @ Cash Ale 3,76,875 | Vishal's Capital A/c 11,2500 Bank Ale 14.76.00 Air Conditioners A/c 72,000 Saurabh's Capital Alc 11,25,000 Refrigerator Alc bs Sales Alc am Furniture and Fixtures Alc 37.800 Computers Alc a Office Equipments Alc ian Advertisement Expenses Alc ani cen tpi ‘e200 ee eposits (BSES & Reliance Comm. pee ant 20,28,000 pa ‘and Magazines Alc jong Peete EXDENSES Ne sad fig Expenses Nc 3256 peryersenses AIC 4,900 rransportation Charges Ale 36,000 aintenance Charges Ac 24.008 wane charges AC oat icity Charges Alc Fee! Expenses Alc $3000 ratepnone and Mobile Charges Ac 21,000 vieelaneous Expenses Alc 24750 salaries Alc 3,78,000 48,90,000 48,90,000 ‘Trading and Profit and Loss Account (B) Dr. forthe year ended 3 1st March, 2017 Cr. Particulars @)| Particulars a | To Purchases 20,25,000 By Sales 26,40,000 ‘Add: Credit Purchases 12,000 20,37,000 | Add: Credit Sales 9,000 26,49,000 To Advertisement Expenses By Closing Stock 6,75,000 (40,500 = 1/5) 8,100 To Gross Profit old 12,78,900 33,24,000 33,24,000 ‘To Advertisement Expenses Alc (40,500 x 4/5) 32,400 | By Gross Profit b/d 12,78,900 ToRent Alc 4,62,000 | By Accrued Bank Interest 97,500 To Interior Decoration Expenses Alc 24,000 Stationery 525 ‘Add: Outstanding Charges 900 4,425 To Periodicals and Magazines 4,200 ‘Refreshment Expenses 5,400 ‘Legal Expenses 2,250 To Petty Expenses. 4,800 To Transporation Charges 36,000 Yo Maintenance Charges 24,000 To Insurance Charges 2,700 To Electricity Charges 33,000 LTo intemet Expenses 15,000 aBy Profit and Loss A/c Balance Sheet '1st March, 2017 asat3; aa PASSA ce Capital Alcs: Cash 376.875 Vishal 11,25,000 Bank 14,76,000 287,137: 14,12,137.5 | Less: Amount transferred to ‘Add: Net Proft 7.1375 ne 00000 |rize0m Saurabh 11,25,000 Fixed Deposit 3,00,000 ‘Add: Net Profit 287.1375 | 14,12,1375 | Air Conditioners 72,000 Creditors 12,000 | Less: Depreciaiton 7.200 ‘Outstanding Stationery Charges * 900 | Refrigerator 22,500 Less: Depreciation 2,250 Furniture and Fixtures 37,500 Less: Depreciation 7,500 Computers 54,000 Less: Depreciation 16,200 Office Equipments Security Deposits (BSES and Reliance Comm.) Accrued Bank interest Debtors 9,000 Less: Bad Debts 1,050 }—_| Closing stock 28,37,175© (i Following ratios are calculated so as to ascertai firm’s business: (a) Gross Profit Ratio = Gross Profit. Net Sales = ©1278900%100 % 2649000 = 48.28% (b) Net Profit Ratio = Net Profit x100 Net Sales — © 574275100 ~~ % 2649,000 21.68% (©) Return on Capital Employed = _N¢t Profit x 100 Capital Employed in the profitability of partnership 100 & 28,24,975, 20.33% . 4 __ Operating Profit x 100 (a) Operating Profit Ratio Se Nema i Operating Profit = Net Profit - Accrued Bank Interest = %5,74,275 - 297,500 = %4,76,775 _ © 4,76,775% 100 _ mn a 1B 2 26,49,000 ; . _Cost of Goods Sold + Operating Expenses areas 7 Net Sales Cost of Goods Sold = Net Sales ~ Gross Profit = %26,49,000 - 712,78,900 = %13,70,100 Operating Expenses = %8,02,125 _ %13,70,100+%8,02195 bs %26,49,000 221,72,225 = gags p00 "1007 82% Operating Profit Ratio + Operating Ratio = 100% 18% + 82% = 100% x 100 Operating Ratio~wenly Position: t on the Profitability vi 3 ee Profit Ratio: The gross profit ratio is higher than the Norm fixed fo : firm, This may be due to; ()) High selling price (ii) Lower price of ray Materite ney of the labour, Iso (b) Net Profit Ratio: The actual net profit ratio is near i. a NOT set for the firm, This shows firm has been able to achieve the desired level of profit, (c) Return on Capital Employed: The actual return on capital employed ratig ig less than the norm set for the firm. It shows the capital employed has not been use i. the desired manner by the firm. He must take proper Steps SO as to use the capita, in an efficient and effective manner so as to increase the returns. So the first Year performance of firm’s business is not very satisfactory. : (4) Operating Profit Ratio: The norm set for the Operating profit ratio was 29% the actual ratio is only 18%, which is not acceptable. It might be due to increas operating expenses, such as rent, salary, insurance charges etc. Therefore, advised to keep a check on these expenses, (e) Operating Ratio: There has been an increase of 7% in this ratio as compared to the norm set for it. Again this increase in the ratio may be due to (i) Higher Purchase Price of raw materials, (ji) Increased amount of rent, salary, electricity ang insurance etc. but sed firm ig Gi) Following ratios are calculated to judge the short-term and long-term solvency Position of the business: Short-term Solvency (Liquidity) Ratios: Current Assets Current Ratic = ° ™ Current Liabilities Cash + Bank + Debtors + Stock = Creditors + Outstanding Stationery charges 9 & 22,35,825 Current Ratio = Ss = 173,32; = 12900 aad Current Assets = Current Liabilities and profitability, (@) Quick Ratio = Quick Assets _ & 1560895 ener Current Liabilities ~~ % 19900 ' Comment: ‘The actual Quick Ratio is much higher than the norm which shows that the firm is highly liquid After computing Current and Quick ratio, ei s it is reveal ’s short-term financial position ig good: vealed that firm’s shortLong-term Solvency Ratios: 5 Owner's Funds _ 7 28,24,275 Proprietary Ratio = —“MC! § Sunes _ & 28,24,275 _ (h) Proprictary Ratio = Total Assets © 28,37,178 Comment: If compared with the norm, the ratio is satisfactory. As a matter of fact, the ratio is considered as ideal even when half of the total assets are financed through proprietary funds but here it is more than that. It seems firm is adopting a very conservative policy, as regards financing of fixed assets through borrowing funds. Such a policy would not give the benefit of trading on equity to the owner. 5 l Fixed Assets (i) Fixed Assets Ratio = ee eee BEY Long-term funds = 2193350 _ p74 & 2824975 Comment: The ratio set by norms is 0.67:1. Howev It means a major portion of lon working capital also. 1:1 = 100% er, the actual ratio is very low. g-term funds have been used for financing a part of; ’ ees (RATIO ANALYSIS) Following are the data of the business of Prabhat Traders Ltd., dealing in electronic toys for the year ended on 31st March, 2020: Inventory Turnover Ratio 1.5 Times Average Collection Period 3 months Average Payment Period 2 months Gross Profit Ratio 25% Opening Trade Receivables 242,000 Gross Profit for the year 256,000 Bills Receivables 73,500 1,400 Bills Payables Closing inventory of the year ended 31st March, 2020 is 71,400 above the opening inventory. You are required to calculate: (i) Revenue from Operations (ii) Sundry Debtors (iii) Closing Inventories (iv) Sundry Creditors.Solution: tions: (i) Calculation of Total Re’ Gross profit Gross Profit Ratio = =F Revenue from Operation 56,000 = ———_-aue frommO peiations” L00, 5 = ; 25 = Net Revenue from Operations 56,000 , 100 25 venue from Opera ae 100 Net Revenue from Operations = Net Revenue from Operations = %2,24,000 (ii) Calculation of Sundry Debtors: lection Period = 3 months 4 ee ee No. of months in a year Average Collection Period = 4 Receivables Turnover Ratio 12 months 3 months = Trade Receivables Turnover Ratio . _ 12 months Trade Receivables Turnover Ratio = ———~~__—- = 4 times 3 months Net Credit Revenue from Operations Ratio= Trade Receivables Turnover Ratio: “Average Trade Receivables 2,24,000 4= ‘Average Trade Receivables Average Trade Receivables = 224,000 _ 256,000 4 Opening Trade Receivables : Closing Trade Receivables = 56,000 Opening Trade Receivable + Closing Trade Receivable = 1,12,000 / 42,000 + Closing Trade Receivables = 1,12,000 = 70,000 Closing Trade Receivables Sundry Debtors = Closing Trade Receivables — Bills Receivable = 770,000 - 3,500 = 766,500 (ii) Calculation of Closing Inventories: Inventory Turnover Ratio = ‘1.5 Times Cost of Revenue from Operations Inventory Turnover Ratio = Average Inventory Cost of Revenue from Operations = Revenue from Operations — Gross Profit Cost of Revenue from Operations = 2,24,000 — 56,000 = %1,68,000 1,68,000 c= Average Inventory Inventory Turnover RatioAverage Inventory = Cost of Revenue from Operations Inventory Turnover Ratio Average |, Be Inventory = 168000 _ 21,12,000 15 Average Inventory = Opening Inventory + Closing Inventory = Eg inventory + Closing Inventory %1,12,000 = Opening Inventory + Closing Inventory 7 2 Total value of Opening and Closing Inventory = 21,12,000 x 2 ; _ = %2,24,000 Closing Inventory is higher than Opening Inventory by ®1,400 Then, Opening Inventory = 32,24,000 21,400 £2,24,000 -81,400 2 Opening Inventory = £222,600 91) 300 ; M, Hence, Closing Inventory = 111,300 + 1,400 = 1,12,700 Gv) Caleulation of Sundry Credito: Average Payment period = 2 months No. of months in a year ~ Trade Payables Turnover Rado _ 12 months 2 months — Net Credit Purchases Average Payables Average Payment Period Trade Payables Turnover Ratio = 6 times Trade Payables Turnover Ratio Calculation of Purchases: Cost of Revenue from Operations = Opening Inventories + Purchases — Closing Inventories ; = Cost of Revenue from Operations + Closing presses Inventory ~ Opening Inventory = 1,68,000 + 1,12,700 - 1,11,300 = F1,69,400 Purchases = Trade Payables Turnover Ratio 1,69,400 Average Payables 7 = 28,233 Trade Payables = _ 1,400 88: Bills Payable = %26,833 teditors ae Average Payablesof €10,00,000. The management of Ragini Ltd. is required to Ragini Ltd. wants to raise a bank loan utflow of cash which would enable the banker to decide about submit a report about the inflow and o'granting the loan, You ave algo required to present the information about cash jy from different activities in the form of a bar diagram: 4 wea Following Balance Sheets ave related to Ragini Lid: ‘ Parloulers ‘S4et Mar., 2020 | tm, |. EQUITY AND LIABILITIES , 1, Shareholders’ Funds au (a) Share Capital 3,50,000 (0) Reserves and Surplus 22,400 2.80.9) 2. Non-current Liabilities 2 oq (a) Long-term Borrowings 49,000 3. Current Liabilities 820 (a) Short-term Borrowings 47,600 (0) Trade Payables 77,000 8759 (c) Short-term Provisions 70,000 © %q Total CAl 7 Stan |e UL ASSETS Pam 1. Non-current Assets (a) Fixed Assets (i) Tangible Assets 1.75,000 210 2. Current Assets ie) (@) inventories 2,45,000 2:10.00 (b) Trade Receivables 1,68,000 140,009 (¢) Cash and Cash Equivalents 24,500 8.400 (4) Other Current Assets 3,500 2100 Total 616,000 570.500 —— ED | 8.0.0 | Notes to Accounts: Particulars 31st Mar., 2020 | 31st Mar, 2019 & ® 1. Share Capital Equity Share Capital 2,80,000 12% Preference Share Capital 70,000 2. Reserves and Surplus ‘Surplus, /.¢., Balance in Statement of Profit and Loss 5,600 7,000 General Reserve 16,800 14,000 22,400 |__21,000 ———— | 3. Long-term Borrowings 13% Debentures 4, Short-term Borrowings Bank Overdraft 47,600 |__87,500 _—{short-term Provisions provision for Taxation 4, Tangible Assets Fired Assets Less: Accumulated Depreciation 7. Inventories ‘Stock }. Trade Receivables Debtors 9. Cash and Cash Equivalents: Cash at Bank 10. Other Current Assets Prepaid Expenses 2,80,000 2,87,000 77,000 2,10,000, 2,140,000 3,500, 2.100 Note: Proposed dividend for the years ended 31st March, 2019 and 2020 was 220,000 and %24,000 respectively. Additional information: (i) An interim dividend of £31,500 has been paid during the year in addition to proposed dividend for the year ended 31st March, 2019. (i) Income tax of €24,500 has been paid during the year. Gi) Fixed assets (costing €70,000 and provision for depreciation up to the date of sale 21,000) were sold for 35,000. (iv) Preference dividend paid during the year 8,400. (v) New debentures have been issued at the end of the current year. } ‘Also, give a report commenting on the cash position of the company.Cash Flow Statement for the year ended 31st March, 2020 — Particulars. ‘A. Cash Flows from Operating Activities Net Profit before Taxation 99,800 ‘Add: Non Cash Items (items to be added back) Loss on sale of Fixed Assets 14,000 Depreciation 48,000 Interest on Debentures (42,000 x 13%) +—_—5.460 | Operating Profit before Working Capital Changes 1,68,260 . Less: Increase in Inventories (35,000) Increase in Trade Receivables (28,000) Increase in Other Current Assets (Prepaid Expenses) (1,400) Decrease in Trade Payables (7,000) Cash generated from Operating Activities 96,860 Less: Income Tax Paid (24,500) Net Cash from Operating Activities “a aot ream B. Cash Flows from Investing Activities Sale of Fixed Assets 35,000 Purchase of Fixed Assets (63,000) Net Cash used in Investing Activities. (8) (28,000) C. Cash Flows from Financing Activities Issue of Equity Share Capital 87,500 Redemption of Preference Shares (17,500) Issue of Long-term Borrowings (Debentures) 7,000 Repayment of Short-term Borrowings (Bank Overdraft) (39,900) Proposed dividend paid for previous year (2019) (20,000) Interim dividend paid during the year (31,500) Preference Dividend Paid (8,400) Interest on Long-term Borrowings (Debentures) (5,460) Net Cash used in Financing Activities (c) (28,260) D. Net Increase in Cash and Cash Equivalents (A+B+C) 16,100 —. Add: Cash and Cash Equivalents in the beginning of the year 8,400 F. Cash and Cash Equivalents at the end of the year 24,500 Working Notes: (1) Calculation of Net Profit before Taxation | Particulars _@] ‘Surplus, /e., Balance in Statement of Profit and Loss (6,600 — 7,000) (1,400) Adjustments for. Transfer to General Reserve 2,800 Preference dividend paid 8.400 Interim Dividend Paid 31500 Proion Gr Toca zngon rovision for Taxation Net Profit before Taxation rd aay(2) Dr. Fixed ans Account; Cr. : To Balance b/d 2020 | To Bank A/c Mar. 31 | (Balancing Figure being purchase) By Cash Alc (Sale) By Provision for Dep. A/c By Statement of Profit and Loss (Loss on Sale) By Balance c/d 3,50,000 (3) Dr. Provision for Depreciation Account Cr. Particulars Mar. 31 | To Fixed Assets A/c By Balance b/d Mar. 31 | To Balance c/d Mar. 31 | By Statement of Profit and Loss (Balancing Figure) Provision for Taxation Account To Bank A/c Mar. 31 | To Balance c/d