Professional Documents
Culture Documents
04 Assignments Practical Questions NEW
04 Assignments Practical Questions NEW
M/s E Traders is a firm of two partners Mr. S & Mr. N dividing profits & losses in the ratio of 3:2. The
following are the balances in their ledgers on 31st March, 2005
You are required to prepare Trading and Profit & Loss Account for the year ending 31st March, XXXX
and the Balance Sheet on that date after making the following adjustments:-
(1) (i) Depreciation is to be provided for on Plant & Machinery at 10% p.a. and on Builing at
6% P.A.
(ii) Provide for rent payable for February and March XXXX at Rs. 500 p.m.
(iii) Provision for Bad Debts must be maintained at 5% of Debtors.
(iv) Provide interest on capital at 10%. No interest on drawings.
(2) Purchases included Plant & Machinery costing Rs. 3,000 purchased on 01-04-2004.
(3) The Manager is entitled to a commission of 10% of Net Profits after charging his
commission but before interest on capital accounts of Partners.
(4) The closing Stock was Rs. 16,800.
Profit & Loss (Adjustment) Accounts of XYZ Ltd. as on 31st March, .XXXX
Particulars Amt. (Rs.) Amt. (Rs.) Particulars Amt. (Rs.) Amt. (Rs.)
70,200 Sales 4,34,400
Stock Opening - Sales Returns 12,500 4,21,500
Purchases 3,64,650 Stock closing 1,20,000
- Purchases Returns 8,700
3,55,950
- Gupta’s Capital A/c 700
3,55,250
- Furniture A/c 1,000
3,54,250
+Purchases A/c 1,800 3,56,050
Carriage A/c 27,900
+ Carriage outstanding 150 28,050
Balance c/f to P& L A/c 87,2,00
Total 5,41,500 Total 5,41,500
P & L A/C
Particulars Amt. (Rs.) Amt. (Rs.) Particulars Amt. (Rs.) Amt. (Rs.)
Rates & Taxes 8,550 Gross Profit 87,200
Salaries 13,950 Interest received 400
+ outstanding 1,200 15,150 Interest outstanding 3,650
Bad & Doubtful Debts 1,650 Discount Received 6,300
Printing & Stationery 21,900
- prepaid 5,475 16,425
Prompt Payment Discount 627
Insurance 900
- Prepaid 120 780
Discount Paid 11,310
Depreciation on Furniture 370
Interest paid on bank loan 1,350
+ outstanding 450 1,800
General Expenses 6,000
Audit Fee 1,050
Traveling Expenses 3,500
Postage & telegram 4,070
Balance c/f 2,6,268
Total 97,550 Total 97,550
Working Notes
BALANCE SHEET
LIABILITIES Amt. (Rs.) Amt. (Rs.) Assets Amt. (Rs.) Amt. (Rs.)
Sundry Creditors 22,200 Cash in hand 570
Less Mr. Gupta’s A/c 4,000 18,200 Cash at Bank 12,000
Carriage outstanding 150 Stock 1,20,000
Salaries outstanding 1,200 Prepaid Insurance 120
Prepaid Printing & Advertisement 5,475
Bank Loan 6% 30,000 Sundry Debtors
Interest outstanding on Bank Loan 6% 450 - Mr. Gupta’s A/c 36,000
3,000
Bad & Doubtful Debts 33,000
1,650
- Prompt payment 31,350
Discount 627 30,723
P&L A/c 26,268 Investment 7,500
9% Deposits with A.N. Sen 45,000
Interest Receivable on 9% Deposits
with A.N. Sen 3,650
Capital : (in Balancing figure) 1,52,100 Furniture at cost 2,700
+ Purchases 1,000
3,700
- Depreciation 370 3,330
Total 2,28,368 Total 2,28,368
The Trial Balance of XYZ Ltd. for the year ending 31st March, XXXX , as under:-
Trial Balance of XYZ Ltd. as on 31st March, .XXXX
PARTICULERS Rs.
Share Capital: 5,000 Equity Shares of Rs. 100 each 5,00,000 4L
6% Debenture secured on the mortgage of fixed assets 1,00,000 4L
Provisions for Taxation for the assessment year 2001-02, 2002-03 1,00,000 4L
Sundry Creditors 52,000 4L
Discount on issue of Debentures 4,000 4L
Profit & Loss A/c (Credit Balance) 10,000 4L
Gross Profit 5,00,000 2C
Dividend Received on Investment ( Gross Rs. 10,000) 7,000 2C
Director’s Fees 1,00,000 2D
Interest on Debentures 5,000 2D
Income Tax deducted on Interest on Debentures 1,500 2D
Audit Fee (including Rs. 1,000 for Tax Representation) 5,000 2D
Miscellaneous Trade Expenses 1,10,000 2D
Advance against Construction of Buildings 50,000 4A
Building (Cost Rs. 4,00,000) 3,00,000 4A
Furniture (Cost Rs.1,00,000) 5,000 4A
Moter Vehicles 30,000 4A
Equity Share of other Companies (Market Value Rs. 2,20,000) 2,00,000 4A
5,000 10% Preference Shares of Rs. 10 each of other companies (Rs. 6 paid up) 30,000 4A
Stock in Trade (at cost) 2,00,000 4A
Sundry Debtors (Consider for Unsecured Goods) 1,40,000 4A
Cash at Bank 57,500 4A
Preliminary Expenses 30,000 4A
You are required to prepare a Profit & Loss Account for the year ending 31st March, XXXX and the Balance
Sheet on that date after taken into Account following adjustments:
1. The method of valuation of Closing Stock has been charged & this resulted in
reduction of the value of the closing stock to Rs. 1,90,000. This has not been adjusted. 4A, 2D
2. Closing Stock also includes goods worth Rs. 20,000, which cannot be marketed. 4A,
2D
3. Provide Depreciation at @10% on the original cost of all fixed assets. 4A, 2D
4. Moter Vehicles account represents two old vehicles standing in the books at Rs.
5,000 each (original cost Rs. 15,000 each) & a new vehicle purchased on 1st January, XXXX for Rs.
20,000. One of the old vehicles was sold for Rs. 4,000 & amount was credited to Sales Account. 4A,
2D
5. The Company has contracted for the construction of a building at Rs. 1,50,000
which is still incomplete. 4A
6. Provide Rs. 1,00,000 towards taxation liability for the current year. 4A, 2D
7. Sundry Creditors include Rs. 2,000, which had already been paid. 4L
8. Dividend is proposed for the year at 20%.4L, 2C
9. Debtors outstanding for more than six months: Rs. 40,000. . 4A, 2D
10. Cash Balance includes a Cheque for Rs. 10,000 returned by the banker for want of
balance in the account. . 4A, 2D
P& L Adj.A/c
Particulars Amt. (Rs.) Particulars Amt. (Rs.)
Provisions for Taxation 1,00,000 Balance b/d 10,000
Provisions for 1,00,000 P& L A/c 2,00,500
Balance c/d 10,500
Total 2,10,500 Total 2,10,500
BALANCE SHEET
LIABILITIES Amt. (Rs.) Amt. (Rs.) Assets Amt. (Rs.) Amt. (Rs.)
Capital : 5,00,000 Fixed Assets Building at cost 4,00,000 2,60,000
- Depreciation 1,00,000
3,00,000
- Depreciation 40,000
Bank Loan 30,000 Furniture at cost 10,000
- Depreciation 5,000
5,000
- Depreciation 1,000 4,000
Unsecured Loan Moter vehicle (1& 2) at cost 30,000
Sundry Creditors 22,200 - Depreciation 20,000
Less Mr. Gupta’s A/c 4,000 18,200 10,000
- - Depreciation 3,000 7,000
(3) at cost 20,000
Depreciation 2,000 18,000
Reserve & Surplus P& L A/c 10,500 INVESTMENTS
Equity Shares (at Cost & Paid 2,00,000
up value)
Preference Shares (at Cost 3,00,000
PROVISIONS & Paid up value)
Provisions for 2000-01 & 01-02 1,00,000 Current Assets
+ provisions for current year 1,00,000 2,00,000 Stock in Trade (at Cost ) 2,00,000
Less Devaluation 10,000
1,90,000
Less Obsolance 20,000 1,70,000
Provisions for Proposed Dividend 1,00,000 DEBENTURES
Within Six Month 1,00,000
Over Six Month 40,000 1,40,000
Cash & Bank Balance 57,500
_ Cheque Returns 10,000 47,500
Misc. Assets
Building Advance 50,000
Preliminary Expenses 30,000
Discounts on issue of 4,000
debentures 84,000
Total 9,60,500 Total 9,60,500
From the following Trial Balances of Mr. Keshav Kant as on 31st March, 2006, you are required to
prepare Trading and Profit & Loss Account for the year ending 31st March, 2005 and the Balance
Sheet on that date after making the necessary adjustments:-
Capital:- 8,00,000 4L
Drawings: 60,000 4L
Sales 23,10,400
1C
Commission on Sales 45,000 2C c
Stock opening 75,000 1C
Purchases 15,95,000 1C
Carriage Inward 25,000 1C b
Wages (for 11 months upto 28-02-2006) 66,000 1C
Salaries 1,40,000 2C
Sundry Creditors 3,00,000 4L
Sundry Debtors 2,50,000 4A e
Bad Debts 15,000 2C e
Provisions for Bad Debts 8,000 2C
Discount received 15,000 2D
Printing, Stationary & Advertisements 18,000 2C
Misc. Expenses 30,000 2C
Postage Telephones & Telegrams 12,000 2C
Machinery 5,00,000 4A b&f
Building 4,00,000 4A f
Furniture, Fixture & Fittings 40,000 4A f
Insurance 24,000 2C
Investments 1,00,000 4A d
Interest received on Investments 12,000 2D
Cash at Bank 150,000 4A
ADJUSTMENTS:-
(a) The closing Stock was Rs. 2,25,000. (1C & 4A)
(b) Machinery Purchases costing Rs. 45,000 on 01-10-2005 was shown as Purchases A/c.
Freight paid on the machinery was Rs. 5,000 which is included in the Freight on Purchases. (4A
& 2D)
(c) Commission is payable @ 2% on Sales.(2D)
(d) Investments were sold at 10% profit but entire sale proceed have been taken as sales. (2C
& 4A)
(e) Write off Bad Debts Rs. 10,000 & create a provision for Doubtful Debts @ 5% of
Debtors. (2C & 4A)
(f) Write off Depreciation on Building @ 2% and on Machinery & Furniture Fixture &
Fittings at 10%. (2C & 4A)
Capital:- 8,00,000 4L
Drawings: 60,000 4L
Sales 23,10,400 1C
Commission on Sales 45,000 2Cc
Stock opening 75,000 1C
Purchases 15,95,000 1C
Carriage Inward 25,000 1Cb
Wages (for 11 months upto 28-02-2006) 66,000 1C
Salaries 1,40,000 2C
Sundry Creditors 3,00,000 4L
Sundry Debtors 2,50,000 4Ae
Bad Debts 15,000 2Ce
Provisions for Bad Debts 8,000 2C
Discount received 15,000 2D
Printing, Stationary & Advertisements 18,000 2C
Misc. Expenses 30,000 2C
Postage Telephones & Telegrams 12,000 2C
Machinery 5,00,000 4Ab & f
Building 4,00,000 4A
f
Furniture, Fixture & Fittings 40,000 4Af
Insurance 24,000 2C
Investments 1,00,000 4A d
Interest received on Investments 12,000 2D
Cash at Bank 150,000 4A
ADJUSTMENTS:-
(g) The closing Stock was Rs. 2,25,000. (1C & 4A)
(h) Machinery Purchases costing Rs. 45,000 on 01-10-2005 was shown as Purchases A/c.
Freight paid on the machinery was Rs. 5,000 which is included in the Freight on Purchases. (4A
& 2D)
(i) Commission is payable @ 2% on Sales.(2D)
(j) Investments were sold at 10% profit but entire sale proceed have been taken as sales. (2C
& 4A)
(k) Write off Bad Debts Rs. 10,000 & create a provision for Doubtful Debts @ 5% of
Debtors. (2C & 4A)
(l) Write off Depreciation on Building @ 2% and on Machinery & Furniture Fixture &
Fittings at 10%. (2C & 4A)
You may assume the production is carried out evenly throughout the year (52 weeks) and wages
and accrue similarly.
ASSUMPTIONS:-
(1) All Sales are made on credit.
(2) It has been assumed that the material has been introduced at the commencement of the
process.
(3) All Materials procured on credit basis only.
(4) Leg in payment of Wages is 1.5 weeks only, hence it can be ignored
(5) Leg in Payment of Overheads is Nil.
(6) There is no depreciation charge..
(7) No provision is made for Contingency in trade being all Debts are good
From the following particulars relating to ABC Ltd., prepare a statement showing changes in Working
Capital alongwith Fund Flow Statement:-
Balance Sheet of ABC Ltd. as on 31st March, 2004 & 2005 is as under:-
2004 2005
ASSETS
CURRENT ASSETS (Net) 1,35,000 1,27,000
Land & Building 9,000 9,000
Plant & Machinery 81,000 1,05,000
(Accumulated Depreciation) (24,000) (26,000)
Patents 16,200 12,600
TOTAL ASSETS 2,32,200 2,49,200
Additional Information:-
(a) A Reconciliation of the balances in retained earning is as follow:-
Opening Balance 68,200
Net income for the Current Year 3,000
Award received from statement of patent infringement case 15,600
Dividend paid (15,000)
Closing Balance 71,800
(b) Net Income of the year 2005 includes a loss of Rs. 4,800 on the sale of a part of plant. The
plant value of Rs. 19,000 at the beginning of the year-accumulated depreciation being Rs. 6,000.
(c) Investments of Rs. 15,000 was sold during the year at a loss. The loss was charged to the
Reserve for future losses on investments & did not appear on the Income Statement.
(d) During the current year 12% Debentures were called for redemption. Most of them were
refunded through new 14% Debentures & the rest were purchased for cash.
(e) The Equity Shares were issued in exchange of machinery. The rest of Plant & Machinery were
purchased for cash
.
31-03-2005 31-03-2004
Current Assets
Cash & Bank Balance 47,500 49,800
S.. Debtors 1,67,800 1,18,300
Investments 50,000 1,00,000
Stock 90,500 3,55,800 55,600 3,23,700
Fixed Assets 5,20,000 4,80,000
Less Deprecation 1,40,000 3,80,000 1,08,000 3,72,000
Preliminary Expenses 0 0 7,200 7,200
TOTAL 7,35,800 7,02,900
Current Liabilities
S Creditors 1,95,300 1,33,650
Provisions
Proposed Dividend 15,000 28,800
Provisions for Taxation 32,000 47,000 50,000 78,800
Capital : Equity Shares of Rs. 100 each 4,00,000 3,60,000
issued for cash
Reserve 60,000 1,10,000
. Surplus 33,450 93,450 20,450 1,30,450
7,35,800 7,02,900
This year sakes were 3,50,000 units. The company desired to earn a net income of Rs. 6,00,000 before taxes.
The firm is evaluating a marketing program designed to achieve the firm’s desired Net Income. The program
would increase fixed cost by Rs. 1,45,000 & variable cost by Rs.0.25 per unit.
Profit / Volume Ratio (or P / V Ratio) = CONTRIBUTION per unit or Total Contribution
Selling Price Per Unit Total Sales
In case P / V Ratio is to be expressed as % of Sales the figure can be derived from the formulae as
given above should be multiplied by 100. thus
BEP (of output) = Fixed Cost X Selling Price per Unit = Rs. 9,00,000 x Rs. 3 = Rs. 30,00,000
CONTRIBUTION per unit Rs. 3
or = Fixed Cost x Total Sales Rs. 9,00,000 x Rs. 35,00,000 = Rs. 30,00,000
Total Contribution Rs. 10,50,000
or Fixed Cost = Rs. 9,00,000= Rs. 9,00,000 = Rs. 30,00,000 (Here P / V Ratio = Contribution / Sales = 3/10)
1 – Variable cost per Unit =1 – 7 (or 0.3)
Selling Price per Unit 10-00
At BEP, the desired profit is zero, in case of volume of output of sales is to be computed for a desired
profit, the amount of desired profit should be added to the fixed cost in the formula given above, hence
Unit sales for desired profit = Fixed Cost + desired profit = Rs. 16,45,000 = 2,13,637 Units
Contribution per unit Rs. 7.7
or Fixed Cost + desired profit = or Fixed Cost + desired profit =Rs. 16,45,000 = Rs. 25,52,960
1 – Variable cost per Unit P / V Ratio (0.6443) (Here P / V Ratio = Contribution / Sales = 7.70/11.95=0.6443)
Selling Price per Unit
======================================================================
A MNC soft drink company is planning to establish a subsidiary in India to produce mineral
water. Based on the estimated annual sales of 40,000 bottles mineral water, cost studies shows the
following estimates for the Indian Subsidiary:-
The Indian production will be sold by the manufacturer’s representatives who will receive a
commission of 8% of the sale price.
From the cost worked out in Column No. 1 & 2 of the above table, if Sales = 100%
- Profit 10%
Commission = 8% 18%
Total Cost = 82%
If 82% of sales = Rs. 4,92,000 then Total Sales for 40,000 units = Rs. 4,92,000 X 100 / 82 = Rs. 6,00,000
then Selling Price per unit = Rs. 6,00,000 / 40,000 units = Rs. 15.00 (as worked out in Column No. 3 & 4)
& proposed Selling Price per unit = Rs. 15.00 – 1-00 = Rs. 14.00 (as worked out in Column No. 5)
-
Profit / Volume Ratio (or P / V Ratio) = CONTRIBUTION per unit or Total Contribution
Selling Price Per Unit Total Sales
In case P / V Ratio is to be expressed as % of Sales the figure can be derived from the formulae as
given above should be multiplied by 100. thus
At BEP, the desired profit is zero, in case of volume of output of sales is to be computed for a desired
profit, the amount of desired profit should be added to the fixed cost in the formula given above, hence
Unit sales for desired profit = Fixed Cost + desired profit = Rs. 16,45,000 = 2,13,637 Units
From the given data For 4,000 Unit Total Per Unit Proposed Decrease
20% of present SP 25% of present SP
Sales 1,00,000 25.00 80,000 75,000
Variable Cost Material 40,000 10.00
Labour 10,000 2.50
Variable OH 20,000 70,000 5.00 17.50 70,000 70,000
Contribution 30,000 7.50 10,000 5,000
Fixed Cost 18,000 4.50 18,000 18,000
Profit 12,000 3.00 -28,000 -23,000
(c ) (i) No. of Units sold = Fixed Cost + Desired Profit = Rs. 18,000 + 12,000 = 12,000 units
Contribution per Unit Rs. 2.50
(ii) No. of Units sold = Fixed Cost + Desired Profit = Rs. 18,000 + 12,000 = 24,000 units
Contribution per Unit Rs. 1.25
(d) Proposed Selling = Contribution = Fixed Cost + Desired Profit = Rs. 18,000 + 12,000 = Rs. 60.00
Proposed No. of Units Proposed No. of Units 500
CHAPTER 10
You are required to calculate overheads variances when:-
(a) Standard Overhead rate Per Hour is used
(b) Standard Overhead rate Per Unit is used
BUDGETED ACTUAL
Production in units 12,500 11,000
Man Hours 6,250 5,750
OVERHEAD COST:
Fixed 12,500 13,000
Variables 50,000 45,000
Overhead Cost Variance
!
VOH Cost Variance FOH Cost Variance
! ! !
!
VOH VOH FOH
FOH
Expenditure Variance Efficiency Variance Expenditure Variance Expenditure
Variance
!
!
FOH Exp
FOH Capacity Variance
Variance
Variable Total OHCV (When Standard Overhead Rate per Hour is used):-
Standard Fixed OH Rate per hour =
Budgeted FOH = Rs. 12,500 = Rs. 2 per Hour
Budgeted Hours 6,250 hours
Variable Total OHCV (When Standard Overhead Rate per Unit is used):-
= VOHCV + FOHCV
Verification:- Total OHCV = Variable OHCV - Fixed OHCV = (- 3,000) = (- 1,000) + (- 2,000)
Verification:- Total OHCV = Variable OHCV - Fixed OHCV = (- 500) = ( 1,000) + (- 1,500)
CHAPTER 13
XYZ Ltd. has a debt of Rs. 45,00,000 @9% & Equity of Rs. 55,00,000. This firm has sales of Rs. 75,00,000.
Variable Cost of Rs. 42,00,000 and Fixed Cost of Rs. 6,00.000.
What is the firm Return on Investment (ROI)?
(ii) Does it have favourable Financial Leverage?
(iii) If the firm belongs to an industry whose assets turnover ratio is 3, does it have a
high ore low assts leverage?
What are the Operating Financial & Combined Leverage of the firm?
If the sales drop to Rs. 50,00,000what will be the new EBIT?
LIABILITIES ASSETS
Equity Share Capital 55,00,000
Debt Capital (@ 9% Interest) 45,00,000
TOTAL 1,00,00,000 TOTAL 1,00,00,000
As per given data Statement of Cost & Profits and their distribution is as under:-
Sales Given If sales dropped to
RS. 50,00,000 RS. 50,00,000
Sales S 75,00,000 50,00,000
Less VC VC 42,00,000 28,00,000
Contribution Con. 33,00,000 22,00,000
Fixed Costs FC 6,00,000 6,00,000
Profit PBIT 27,00,000 16,00,000
Less Interest @ 9% I 2,43,000 2,43,000
Profit Before Tax PBT 24,57,00,000 13,57,00,000
Less Tax say @ 38.5% T 9,45,950 5,22,450
Profit after Tax PAT 15,11,650 8,34,450
Return on Equity = PAT/ Equity
Capital 61.50% 15.17%
FINANCIAL LEVERAGE & EQUITY RETURNS
Based on Assets Turnover Ratio 3, the required sales should be Rs. 1 crore x 3 = Rs. 3 crore. Whereas it is
on Rs. 75 Lakh which will be only 25% of the industry’s average, hence is not acceptable being
unsatisfactory
Project P Project Q
discount discount Present Present Present Present
Factor Factor Cash Value Value Cash Value Value
Year @15% @16% Flow @15% @16% Flow @15% @16%
0 -1 -1 -10,000 -10000 -10000 -10,000 -10000 -10000
1 0.870 0.909 6,500 5655 5908.5 3,500 3045 5655
2 0.756 0.826 3,000 2268 2478.0 3,500 2646 2268
3 0.658 0.751 3,000 1974 2253.0 3,500 2303 1974
4 0.572 0.683 1,000 572 683.0 3,500 2002 572
Total of Present Value= 10,469 11322.5 9996 11,092
Initial Outlays= -10000 -10000 -10000 -10000
Net present Value = 469 1322.5 -4 1,092
Hence, from the above calculations, the Net Present Value for Project P is higher hence Project P is proffered.