March 2005
Time: 3Hours Marks: 100
NB:
1. Questions No. 1 is compulsory and carries 20 marks.
2. Attempt any five from the rest questions,each carrying 16 marks
from remaining questions.
3. Working notes should form part of your answer.
4.Proper presentation and neatness is essential.
5. Use of simple calculator is allowed
Q.1. Brijesh started business by introducing capital of Rs. 1,00,000 on 1-4-2004. He has taken Term Loan from Bank of India of Rs. 4,00,000 at 12% interest & purchased premises of Rs. 3,00,000 & Furniture & Equipment of Rs. 1,50,000. His projected Trading & Profit & Loss Account for the first year ended 31st March, 2005 is as follows :-
Rs. | Rs. | Rs. | Rs. | ||
To Opening Stock | -- | By Sales | |||
To Purchases | Cash Sales | 1,70,000 | |||
Cash Purchases | 50,000 | Credit Sales | 8,50,000 | ||
Credit Purchases | 6,50,000 | 10,20,000 | |||
7,00,000 | Less : Returns | 20,000 | 10,00,000 | ||
Less : Returns | 10,000 | 6,90,000 | By Closing Stock | 50,000 | |
To wages | 60,000 | ||||
To Gross Profit c/d. | 3,00,000 | ||||
10,50,000 | 10,50,000 | ||||
To Administrative Expenses | 60,000 | By Gross Profit b/d | 3,00,000 | ||
To Selling Expenses | 1,00,000 | By Profit on sale of Equipment | 5,000 | ||
To Interest on Bank Loan | 48,000 | (Cost of Equipment sold Rs. 20,000) | |||
To Depreciation on Equipment | 30,000 | ||||
To Net Profit | 67,000 | ||||
Total | 3,05,000 | Total | 3,05,000 |
Prepare Cash Flow Statement for the year ended 31st March,2005 as per AS-3& calculate cash & Bank Balance as on that date. Use Indirect Method. Balances on 31stMarch, 2005 expected are Debtors Rs. 1,50,000. Creditors Rs.50,000. Last quarter Interest on Bank loan is not yet paid.
Reconcile your answer by preparing projected Balance Sheet (invertical form) as at 31st March, 2005.
31-3-2003 Rs. | 31-3-2004Rs. | |
Equity Share Capital (shares ofRs. 10 each fully called) | 10,00,000 | 14,50,000 |
Less: Calls-in-Arrears (Rs. 2 per share) | 5,000 | -- |
9,95,000 | 14,50,000 | |
Add: Share Forfeiture Balance (Rs. 8 per share) | 8,000 | 1,600 |
Paid up Equity Capital | 10,03,000 | 14,51,600 |
8% Redeemable Preference Share Capital | 5,00,000 | 4,00,000 |
Securities Premium | 1,00,000 | 40,000 |
Capital Reserve (Net profit on Forfeited Shares reissued) | -- | 16,500 |
General Reserves | 2,47,000 | 3,49,000 |
Profit & Loss Account | 1,50,000 | 7,42,900 |
Loans | 5,00,000 | 10,00,00 |
25,00,000 | 40,00,000 | |
Fixed Assets (At cost Less Dep.) | 12,00,000 | 20,00,000 |
Investments | 3,00,000 | 4,00,000 |
Working Capital | 10,00,000 | 16,00,000 |
25,00,000 | 40,00,000 |
shares have been reissued at Rs. 7 per share.
Reserve of Rs. 1,40,000.
Assets for the year was Rs. 1,80,000.
Current Ratio | 1.75 |
Liquid Ratio | 1.25 |
Stock Turnover Ratio | 9 times (Based on Closing Stock) |
Gross Profit Ratio | 25% |
Debtors collection period | 1.5 months |
Reserves and surplus to share capital | 0.2 |
Cost of Goods sold to Fixed Assets | 1.2 |
Capital Gearing (Long term Loans to Share Capital) | 0.6 |
Fixed Assets to shareholders Funds | 1.25 |
Sales for the year (All are on Credit Basis) | Rs. 12,00,000 |
31stMarch, 2003 | 31stMarch, 2004 | |||
Dr. (Rs.) | Cr. (Rs.) | Dr. (Rs.) | Cr. (Rs.) | |
Land and Building | 25,50,000 | -- | 25,50,000 | -- |
Machinery | 5,50,000 | -- | 8,00,000 | -- |
Furniture | 2,00,000 | -- | 3,00,000 | -- |
Sundry Debtors | 3,00,000 | -- | 5,00,000 | -- |
Cash & Bank Balance | 1,00,000 | -- | 1,00,000 | -- |
Sundry Creditors | -- | 2,00,000 | -- | 3,00,00 |
Outstanding Expenses | -- | 20,000 | -- | 20,000 |
Sales | -- | 20,00,000 | -- | 30,00,000 |
Purchases | 12,00,000 | -- | 15,00,000 | -- |
Opening Stock | -- | -- | 3,00,000 | - |
Admin. Expenses | 2,76,000 | -- | 3,70,000 | -- |
P/L Opening Bal. | -- | -- | -- | 7,44,00 |
Selling Expenses | 80,000 | -- | 1,10,000 | -- |
Share Capital | -- | 20,00,000 | -- | 20,00,000 |
Unsecured Loan | -- | 10,36,000 | -- | 4,66,000 |
52,56,000 | 52,56,000 | 65,30,000 | 65,30,000 |
(1) Dividend paid.
(2) Interest paid.
(3) Issued long term bonds.
(4) Purchased long term investment.
(5) Equipment sold.
(6) Dividend received on shares held.
(7) Purchased land.
(8) Received cash from customers.
(9) Wages paid to workers.
(10) Issued bonus shares out of general reserves.
Rs. | |
Debtors | 30,000 |
Outstanding Manufacturing Exp. | 17,000 |
Cash Balance | 23,000 |
Bills Payable & Creditors | 38,000 |
Machinery (Imported) | 30,000 |
Income earned but not received | 6,000 |
Bank Overdraft | 15,000 |
Bills Receivable | 7,000 |
Prepaid traveling expenses | 4,000 |
Rs. | |
Equity Capital | 3,00,000 |
General Reserves | 4,00,000 |
Profit & Loss A/c | 1,50,000 (Cr.) |
Sundry creditors | 2,00,000 |
Operating Profit | 3,50,000 (Before Interest & Tax) |
Long Term Loan | 2,00,000 (at 12% p.a.Interest) |
Tax Rate is 30%. |
(1) Estimated sales in year Rs. 12,00,000.
(2) His Administrative & Selling expenses are estimated as fixed expenses Rs.2,000 per month and variable expenses equal to 5% of his turnover.
(3) He expects to fix sale price for each product which will be 25% in excess
of his cost of purchase.
(4) He expects to turnover his stock four times in the year.
(5) The sales & Purchases will be evenly spread throughout the year. 20% of sales will be on cash and balance on credit and allowed 2 months credit. He also expects one month credit from his suppliers.
(6) Cash Balance = Fixed and variable expenses for one month.
year ended 31-12-2004
Particulars | Rs. | Particulars | Rs. |
To Opening Bal. B/d. | 1,00,000 | By Sales | 10,00,000 |
To Opening Stock : Raw Material Finished goods | 2,00,000 1,50,000 | By Dividend received | 2,00,000 |
To Purchases :Raw Material Finished goods | 3,50,000 60,000 | By Closing Stock : Raw Material Finished goods | 2,00,000 3,00,000 |
To Manufacturing Exp. | 1,00,000 | ||
To Establishment Exp. | 2,82,000 | ||
To Interim Dividend | 35,000 | ||
To Provision for Tax | 75,000 | ||
To Audit fees | 2,500 | ||
To Directors Fees | 2,000 | ||
To Preliminary Expenses | 5,000 | ||
To Salaries & Wages | 1,00,000 | ||
To Depreciation on :Delivery Van Building for Office | 1,000 1,500 | ||
To Int. on Secured Loan | 10,000 | ||
To Selling & Distribution Exp. | 75,000 | ||
To Loss on Sales of Fixed Assets | 10,000 | ||
To Transfer to General Reserve | 10,000 | ||
To Proposed Dividend | 55,000 | ||
To Balance c/d | 76,000 | ||
17,00,000 | 17,00,00 |
Particulars | 2003 Rs. | 2004 Rs. | Absolute Increase/Decrease Rs. | Increase/Decrease% |
Sales | 6,00,000 | ? | +3,00,000 | ? |
Cost of Goods Sold : Opening Stock | ? | 60,000 | +10,000 | ? |
Purchases | 4,00,000 | ? | +80,000 | ? |
Closing Stock | ? | ? | ? | ? |
Cost of Goods Sold | ? | ? | +97,500 | +25% |
Gross Profit | ? | ? | ? | ? |
Operating Expenses | ||||
(a) Administrative Exp. | 40,000 | ? | ? | +100% |
(b) Financial Exp. | 60,000 | 72,000 | ? | ? |
(c) Selling Exp. | ? | 1,50,000 | +1,00,000 | +200% |
Total Operating Exp. | ? | ? | ? | ? |
Net Profit Before Tax | 60,000 | 1,10,500 | ? | ? |
Provision for Tax | ? | ? | ? | ? |
Net Profit after Tax | 36,000 | ? | +27,000 | +75% |
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