ACCOUNTS

ILLUSTRATION 2:
Sunshine Ltd. Was registered with the Authorized Capital of Rs. 10,00,000 dividend into 2,500, 6% Preference Shares of Rs. 100/- each and 7500 Equity Shares of Rs. 100 each. On 31st December, 1987 all the preference shares were fully paid. Of the equity shares, 4500 shares were fully paid, and on another 1,000 shares only Rs. 50 per share had been called up. The credit balance in profit and loss account on 1st January 1987, was Rs. 9,460. The Directors made the final call of Rs. 50 per share on partly paid Equity Shares on 1st August 1987 and all the calls were duly paid except by a shareholder holding 50 shares. These shares were duly forfeited & subsequently reissued at a discount of 20% before 31st Dec. 1987. In addition to the balances and capital reserve arising from the above, the following balances stood in the books of the Company as on 31st Dec. 1987.

Debit Balances Plant (at cost) Land (at cost) Stock-in-trade (at cost) Furniture (at cost) Preliminary Expenses Goodwill Cash & Bank Balances 3% G.P notes (at cost) (M.V. 68,500) Leasehold premises Sundry Debtors Directors fees Income-Tax in Advance Salaries General Expenses Rates and Taxes Bad Debts written off Credit Balances Gross Profit General Reserve Leasehold Premises Redemption Fund

Rs. 3,34,850 1,29,000 1,96,770 12,250 1,550 1,25,000 1,20,280 71,400 1,50,000 2,10,250 3,925 23,675 73,945 35,270 8,925 7,060

2,85,310 1,20,410 35,400

Debit Balances Plant (at cost) Land (at cost) Stock-in-trade (at cost) Furniture (at cost) Preliminary Expenses Goodwill Cash & Bank Balances 3% G.P notes (at cost) (M.V. 68,500) Leasehold premises Sundry Debtors Directors fees Income-Tax in Advance Salaries General Expenses Rates and Taxes Bad Debts written off Credit Balances Gross Profit General Reserve Leasehold Premises Redemption Fund

Rs. 3,34,850 1,29,000 1,96,770 12,250 1,550 1,25,000 1,20,280 71,400 1,50,000 2,10,250 3,925 23,675 73,945 35,270 8,925 7,060

2,85,310 1,20,410 35,400

SOLUTION

Dr. Profit & loss account for the year ended 30th September, 1987
Rs. To office salaries Add: Outstanding 2189 69 2258 By gross profit

Cr.
Rs.

34628 (Trading A/c credit balance)

To office expenses 622 To insurance Less: Prepaid To delivery expenses 2203 To Advertising Less: Carried forward To provision for bad debts(5% of Rs. 16020) Less old resrve To mortgage interest Add: Outstanding 4339 878 801 201 600 450 150 600 3461 364 62 302

Dr. Profit & loss account for the year ended 30th September, 1987
To depreciation on: Plant & machinery Office furniture(10% on Rs. 300) Patents(10% on Rs. 4000) Motor vans(Rs. 900- Rs 800) To net profit c/d 1718 30

Cr.

2248

400

100

22733

34628 34628

Dr. Profit & loss Appropriation A/c for the yr ended 30th September,1987 Cr.
Particulars To Salary B Rs. 1000 Particulars By net profit b/d By interest on Drawings To interest on capital A B To Interest current A B To commision - B To divisible profit A B 14904 3726 18630 23143 23143 53 140 193 2070 1000 250 1250 A B 330 80 410 Rs. 22733

Balance sheet of A and B as at 30 th september,1987

Liabilities Capital A/c A B Current A/C Less: Depriciation A Add: Interest on capital Interest on Current A/c Profit 1060 1000 53 14994 17017 Less: Drawings 10000 7017 Less: Interest on Drawings 330 6687 Less: Depriciation Motor vans Less: Depriciation Office furniture Less: Depriciation B/D 31687 B/D Plant & Machinery Addition during the year 400 13280 1560 14840 1718 900 100 300 30 270 17792 800 13122 3600 20000 5,000 25000 Rs. Assets Fixed assets Freehold premises Patents 4000 15000 Rs.

Balance sheet of A and B as at 30 th september,1987

B/F B Add: Interest on capital Interest on current A/c Salary Commision Profit 2800 250 140 1000 2070 3726 9986 Less: Drawings 3000 6986 Less:Interest on drawings 80 6906 31687 Current assets Stock Sundry debtors Less: Provision for bad debts Prepaid factory expenses Prepaid insurance Advertising suspense Cash in hand Cash at Bank 16020 801 15219 70 62 878 31 2841 21069 B/F
17792

Mortgage on freehold premises Add: Interest accrued

10000 150 10150

Sundry creditors Salaries accrued

24150 69 72962 72962