Practice numericals

I - Comparative statement analysis:

Question 1:

From the following Balance Sheet, prepare Comparative Balance Sheet of Sun Ltd.:

 
Not 31st March,
31st March, 2019
Particulars e 2018
(₹)
No. (₹)
I. EQUITY AND      
LIABILITIES
1. Shareholder's Funds
(a) Share Capital   3,50,000 3,00,000
2. Non-Current      
Liabilities
Long-term Borrowings   1,00,000 2,00,000
3. Current Liabilities :      
Trade Payables   1,50,000 1,00,000

Total   6,00,000 6,00,000

II. ASSETS      
1. Non-Current Assets      
Fixed Assets (Tangible)   4,00,000 3,00,000
2. Current Assets      
Trade Receivables   2,00,000 3,00,000
Total   6,00,000 6,00,000
       

Solution:
In the books of Sun Ltd.
Comparative Balance Sheet
as at March 31, 2018 and 2019
Absolute Percentag
2018 2019 Change e
Particulars
(₹) (₹) (₹) Change
(%)
I. Equity and Liabilities        
1. Shareholders’ Funds        
a. Share Capital 3,00,000 3,50,000 50,000 16.67
Shareholders’ Fund 3,00,000 3,50,000 50,000 16.67
2. Non-Current Liabilities        
a. Long-term Borrowings 2,00,000 1,00,000 (1,00,000 (50.00)
)
3. Current Liabilities        
a. Trade Payables 1,00,000 1,50,000 50,000 50.00
Total 6,00,00 6,00,00 – –
0 0
         
II. Assets        
1. Non-Current Assets        
a. Fixed Assets (Tangible) 3,00,000 4,00,000 1,00,000 33.33
2. Current Assets        
a. Trade Receivables 3,00,000 2,00,000 (1,00,000 (33.33)
)
Total 6,00,00 6,00,00 – –
0 0
         

Question 2:
Prepare Comparative Statement of Profit and Loss from the following Statement of Profit and
Loss: 

31st 31st
Note March March
Particulars
No. 2019 2018
(₹) (₹)
I. Income      

Revenue from Operations (Net Sales)   3,50,000 3,00,000

II. Expenses      

Purchases of Stock-in-Trade   2,10,000 1,80,000

Change in Inventories of Stock-in-Trade   15,000 20,000

Employees Benefits Expenses   17,500 15,000

Other Expenses   7,500 5,000

Total   2,50,000 2,20,000

III. Profit before Tax (I-II)   1,00,000 80,000

IV. Less: Tax   30,000 24,000

V. Profit after Tax (III-IV)   70,000 56,000
       

Solution:
Comparative Income Statement
for the year ended March 31, 2018 and 2019
Absolute Percentage
2018 2019
Particulars Change Change
(₹) (₹)
(₹) (%)
I. Revenue from Operations 3,00,000 3,50,000 50,000 16.67
II. Expenses        
a. Purchase of Stock-in- 1,80,000 2,10,000 30,000 16.67
Trade
b. Changes in Inventories 20,000 15,000 (5,000) (25.00)
of Stock-in-Trade
c. Employees Benefit cost 15,000 17,500 2,500 16.67
d. Other Expenses 5,000 7,500 2,500 50.00
  2,20,000 2,50,000 30,000 13.67
 Profit before Income Tax (I-II) 80,000 1,00,000 20,000 25.00
Less: Income Tax 24,000 30,000 6,000 25.00
Profit after Income Tax 56,000 70,000 14,000 25.00
       
 

Question 3:

From the following Information, prepare Comparative Statement of Profit and Loss:
 

Particulars 31st March, 2019 31st March, 2018

Revenue from Operations ₹ 30,00,000 ₹ 20,00,000
Other Income (% of Revenue from
12%
Operations) 20%
Expenses (% of Operating
Revenue) 70% 60%
Tax Rate 40% 40%

Solution:

Comparative Income Statement

for the year ended March 31, 2018 and 2019

March 31, March 31, Absolute Percentage

Particulars 2018 2019 Change Change
(₹) (₹) (₹) (%)
I. Revenue from operations 20,00,000 30,00,000 10,00,000 50.00
II. Other Income 4,00,000 3,60,000 (40,000) (10.00)
III. Total Revenue (I + II) 24,00,000 33,60,000 9,60,000 40.00
IV. Expenses 12,00,000 21,00,000 9,00,000 75.00
Profit before Income Tax 12,00,000 12,60,000 60,000 5.00
Less: Income Tax @ 40% 4,80,000 5,04,000 24,000 5.00
Profit after Income Tax 7,20,000 7,56,000 36,000 5.00
         
 
Working Notes:
 
WN1 Computation of Other Income
 
2018 2019
Particulars
(₹) (₹)
Revenue From Operations 20,00,00 30,00,000
0
% of Revenue From Operations 20% 12%
Other Income 4,00,000 3,60,000
 
WN1 Computation of Expenses
 
2018 2019
Particulars
(₹) (₹)
Revenue From Operations 20,00,000 30,00,000
% of Revenue From 60% 70%
Operations
Expenses 12,00,000 21,00,000

Question 4:

From the following information, prepare Comparative Statement of Profit and Loss showing
increase, decrease and percentage:
     
31st March, 31st March,
Particulars
2019 2018
Cost of Materials Consumed ₹ 13,44,000 ₹ 6,00,000
Revenue from Operations (% of
125%
Materials Consumed) 200%
Other Expenses (% of Operating
10%
Revenue) 10%
Tax Rate 50% 50%

Solution:
Comparative Income Statement
for the year ended 31st March, 2018 and 2019
March Absolut Percentag
March
31, e e
Particulars 31, 2019
2018 Change Change
(₹)
(₹) (₹) (%)
I. Revenue from Operations 12,00,00 16,80,00 4,80,000 40.00
(WN1) 0 0
II. Expenses        
a. Cost of Material 6,00,000 13,44,00 7,44,000 124.00
Consumed 0
b. Other Expenses (WN2) 1,20,000 1,68,000 48,000 40.00

  7,20,00 15,12,00 7,92,00 110.00

0 0 0
         
Profit before Income Tax (I- 4,80,000 1,68,000 (3,12,00 (65.00)
II) 0)
Less: Income Tax @ 50% 2,40,000 84,000 (1,56,00 (65.00)
0)
Profit after Income Tax 2,40,00 84,000 1,56,00 (65.00)
0 0
         

Working Notes:
 
WN1 Computation of Revenue from Operations
 
2018 2019
Particulars
(₹) (₹)
Cost of Materials Consumed 6,00,000 13,44,000
% of Materials Consumed 200% 125%
Revenue from Operations 12,00,000 16,80,000
 
WN2 Computation of Other Expenses
 
Particulars 2018 2019
 (₹) (₹)
Revenue From Operations 12,00,00 16,80,000
0
% of Operating Revenue 10% 10%
Other Expenses 1,20,000 1,68,000

II - Common size statement analysis:

Question 5:

Prepare Common-size Statement of Profit and Loss from the following Statement of Profit and
Loss:
 

Year I Year II
Particulars Note No.
(₹) (₹)
I. Income      

Revenue from Operations (Net   14,00,000 16,00,000

Sales)
II. Expenses      

Purchases of Stock-in-Trade   9,00,000 10,00,000

Change in Inventories of   1,00,000 1,80,000
Stock-in-Trade
Finance Costs   80,000 80,000

Other Expenses   90,000 1,30,000

Total   11,70,000 13,90,000
III. Net Profit (I-II)   2,30,000 2,10,000
IV.  Less: Tax   40,000 36,000
V. Net Profit After Tax (III-IV)   1,90,000 1,74,000

Solution:
Percentage of
Absolute Amount
Revenue
Particulars (Rs)
(%)
Year 1 Year II Year 1 Year II
I. Revenue from Operations 14,00,00 16,00,000 100.0
100.00
0 0
II. Expenses        
a. Purchases of Stock-in- 9,00,000 10,00,000 64.28 62.5
Trade
b. Change in Inventories 1,00,000 1,80,000 7.14 11.25
of Stock-in-Trade
c. Finance Cost 80,000 80,000 5.71 5.00
d. Other Expenses 90,000 1,30,000 6.43 8.12
Profit before Income Tax 2,30,000 2,10,000 16.43 13.13
Less: Income Tax 40,000 36,000 2.84 2.25
Profit after Income Tax 1,90,000 1,74,000 13.57 10.88
         
Question 6:

Prepare Common-size Balance Sheet and comment on the financial position of Sun Ltd. and Star
Ltd. The Balance Sheet of Sun Ltd. and Star Ltd. as at 31st March, 2019 are:

Sun Ltd. Star Ltd.
Particulars
(₹) (₹)
I. EQUITY AND LIABILITIES    
1. Shareholders' Funds    
(a) Share Capital 9,00,000 12,00,000
(b) Reserves and Surplus 4,00,000 3,50,000
2. Current Liabilities    
Trade Payables (Creditors) 2,00,000 2,50,000

Total 15,00,000 18,00,000

II. ASSETS    
1. Non-Current Assets    
Fixed Assets (Tangible) 10,00,000 16,00,000
2. Current Assets    
Trade Receivables (Debtors) 5,00,000 2,00,000
Total 15,00,000 18,00,000
     

Solution:
Common Size Balance Sheet
as at March 31, 2019
Percentage of Balance
Absolute Amount
Sheet Total
Particulars (Rs)
(%)
Sun Ltd. Star Ltd. Sun Ltd. Star Ltd.
I. Equity and Liabilities        
1. Shareholders’ Funds        
a. Share Capital 9,00,000 12,00,000 60.00 66.67
b. Reserve and 4,00,000 3,50,000 26.67 19.44
Surplus
2. Current Liabilities        
a. Trade Payables 2,00,000 2,50,000 13.33 13.89
Total 15,00,000 18,00,000 100.00 100.00
II. Assets        
1. Non-Current Assets        
a. Fixed Assets 10,00,000 16,00,000 66.67 88.89
2. Current Assets        
a. Trade Receivables 5,00,000 2,00,000 33.33 11.11
Total 15,00,000 18,00,000 100.00 100.00
         

Comments:

(1) Star Ltd. has a greater share of Capital in the total sources of funds i.e. 66.67% in
comparison to 60% of Sun Ltd.
 (2) Sun Ltd. retains 26.67% of their earnings as a part of Reserves and Surplus. Whereas
Star Ltd. retains only 19.44% of their earnings.
(3) Star Ltd. has invested major portion of its funds on acquiring the Fixed Assets as these
are 88.89% of the total application of funds in comparison to 66.67% of Sun Ltd. On the
other hand, Sun Ltd. emphasises more on Current Assets as these are 33.33% of the total
applications of funds in comparison to 11.11% of Star Ltd.

Question 7:
You are given the following common size percentage of AB Company Ltd for 1997 and 1988.

1997 1998

Inventory 5.20 5.83

Debtors 10.39 ?

Cash ? 7.35

Machinery 49.35 45.35

Building 27.27 29.59

Creditors 20.78 ?
Overdraft ? 10.81

Total Current Liabilities 31.17 ?

Capital 51.95 49.67

Long-term loan 16.88 17.91

Total Liabilities 3,85,000 4,63,000

Workings:
Calculation have been made to the nearest rupee.

(i) Calculation of percentage of Cash for 1997

Cash = 23.38* – 15.59*
= 7.79
* Current = Total Assets – Fixed Assets
= 100 – 76.62
= 23.38
** Inventory + debtor = 5.20 + 10.39 = 15.59

(ii) Calculation of Percentage of overdraft for 1997

Total Current Liability – Creditor = 31.17 – 20.78 = 10.39

(iii) Calculation of percentage of Debtors for 1998

Debtor = 25.06* – 13.18 = 11.88
* Current Assets = Total Assets – Fixed Assets
= 100 – 74.94
 = 25.06

Solution:

1997 1998
Assets
Amt. Amt.
Percentage Percentage
(Rs.) (Rs.)
Assets :
A. Current Assets

Inventory 20,000 5.20 27,000 5.83

Debtors 40,000 10.39 55,000 11.88
Cash 30,000 7.79 34,000 7.35
Total (A) 90,000 23.38 1,16,000 25.06
B. Fixed Assets

Machinery 1,90,000 49.35 2,10,000 45.35

Building 10,05,000 27.27 1,37,000 29.59
Total (B) 2,95,000 76.62 3,47,000 74.94
Total Assets 3,85,000 100.00 4,63,000 100.00
(A+B)

Liabilities :
C. Current
Liabilities
Creditors 80,000 20.78 1,00,000 21.59
Overdraft 40,000 10.39 50,000 10.81
Total (C) 1,20,000 31.17 1,50,000 32.40
D. Long-term
Liabilities
Capital 2,00,000 51.95 2,30,000 49.67
Loan 65,000 16.88 83,000 17.91
Total (D) 2,65,000 68.83 3,13,000 67.55
Total 3,85,000 100.00 4,63,000 100.00
Liabilities
(C+D)

III - Ratio analysis

Question 8:
X Ltd. has a current ratio of 3.5:1 and quick ratio of 2:1. If excess of current assets over quick
assets represented by stock is Rs. 1,50,000, calculate current assets and current liabilities.

Solution
Let Current Liabilities = x
Then Current Assets = 3.5x
And Quick Assets = 2x
 Stock = Current Assets – Quick Assets
1,50,000 = 3.5x – 2x
1,50,000 = 1.5x
x = Rs.1,00,000
Current Assets = 3.5x = 3.5 × 1,00,000 = Rs. 3,50,000.

Question 9:

Calculate the current ratio from the following information: Working capital Rs. 9,60,000;
Total debts Rs.20,80,000; Long-term Liabilities Rs.16,00,000; Stock Rs. 4,00,000; prepaid
expenses Rs. 80,000.

Solution:
Current Liabilities = Total debt- Long term debt
= 20,80,000 – 16,00,000
= 4,80,000
Working capital = Current Assets – Current liability
9,60,000 = Current Assets – 4,80,000
Current Assets = 14,40,000

Quick Assets = Current Assets - (stock + prepaid expenses)

= 14,40,000 - (4,00,000 + 80,000)
= 9,60,000

Current ratio = Current Assets / Current liabilities

= 14,40,000 / 4,80,000
= 3:1

Quick ratio = Quick Assets / Current liabilities

= 9,60,000 / 4,80,000
= 2:1

Question 10:

A trader carries an average stock of Rs. 80,000. His stock turnover is 8 times. If
he sells goods at profit of 20% on sales. Find out the profit.

Solution
Stock Turnover Ratio = Cost of Goods Sold/ Average Stock
= Cost of Goods Sold/Rs. 80,000
Cost of Goods Sold = Rs. 80,000 × 8
= Rs. 6,40,000

Sales = Cost of Goods Sold × 100/80

= Rs. 6,40,000 × 100/80
= Rs. 8,00,000

Gross Profit = Sales – Cost of Goods Sold

= Rs. 8,00,000 – Rs. 6,40,000
= Rs. 1,60,000.

Question 11:
Calculate Gross Profit ratio from the following information:
Opening stock Rs. 50,000; closing stock Rs. 75,000; cash sale Rs. 1,00,000; credits sales
Rs 1,70,000; Returns outwards Rs. 15,000; purchased Rs. 2,90,000; advertisement expenses
Rs. 30,000; carriage inwards Rs.
10,000.

Solution:

Cost of goods sold = Opening stock + net purchases + direct expenses – closing stock
= Rs. 50,000 + (Rs. 2,90,000- Rs. 15,000) + Rs. 10,000 -Rs. 75,000
= Rs. 2,60,000

Total Sales = Cash Sales + Credits Sales

= Rs. 1,00,000 + Rs 1,70,000
= Rs. 2,70,000

Gross profit = Total Sales - Cost of goods sold

= Rs. 2,70,000- Rs. 2,60,000
= Rs. 10,000

Gross profit Ratio = 10,000 X 100 2,70,000 = 3.704%

Question 12:
Calculate price earnings ratio from the following information:
Equity share capital (Rs. 10 per Share) Rs 2,50,000 Reserves
(including current year’s profit) Rs 1,00,000 10 % Preference
Share Capital Rs 2,50,000
9 % Debentures Rs 2,00,000
Profit before interest Rs 3,30,000
Market Price per Share Rs 50.
Tax rate 50 %

Solution:

P/E Ratio = Market price of a Share/Earnings per Share

Earnings per share = Profit available for equity shareholders/ No. of

Equity Share

Profit available for equity shareholders:

Profit before interest = Rs.3,30,000
Less interest on debentures = Rs. 18,000
Rs 3,12,000

Less tax ( 50 % of Rs. 3,12,000) = Rs. 1.56,000

Less preference dividend = Rs. 25,000
Earning after Tax = Rs 1,31,000

Earning per share = Earning after tax / No.of equity shares

= Rs 1,31,000/ 25,000
= Rs. 5.24

P/E Ratio = Market price share / Earning per share

= Rs. 50/ Rs. 5.24
= Rs. 9.54

IV – Cash flow statement analysis

Question 13:
Following are the balance sheets of a Vijay & son:

Liabilities 1‐1‐05 31‐12‐05 Assets 1‐1‐05 31‐12‐05

Creditors 36,000 41,000 Cash 4,000 3,600
Loan from Partner ‐ 20,000 Debtor 35,000 38,400
Loan from Bank 30,000 25,000 Stock 25,000 22,000
Capital 1,48,000 1,49,000 Land 20,000 30,000
Building 50,000 55,000
Machinery 80,000 86,000
2,14,000 2,35,000 2,14,000 2,35,000

During the year Rs. 26,000 paid as dividend. The provision made for depreciation against machinery
as on 1.1.05 was Rs. 27,000 and on 31.12.05 Rs 36,000. Prepare cash flow statement.

Solution:
W. N.
Net profit before tax.
Capital (1.1.05) 1,48,000
Capital (31.12.05) 1,49,000
Diff. 1,000
Add. Dividends 26,000

Net profit before tax 27,000

Machinery account
Particulars Rs Particulars Rs
To Balance b/d 80,000 By Prov. for depreciation 36,000
To Prov. for depreciation 27,000 By Balance c/d 86,000
To Bank (purchase) ? 15,000
1,22,000 1,22,000

Cash flow statement for the year ended 31.12.2005

Particular Rs. Rs.

1.Cash flows from operating activities:
Net profit before tax 27,000
Adjustment for dep. 9,000
36,000
Inc. in current liabilities 5000
Inc. in debtor (3,400)
Decrease in stock 3,000

Net cash from operating activities 40,600

2. Cash flows from investing activities

 Purchase of land (10,000)
Purchase of building. (5,000)
Purchase of machinery (15,000)

Net cash from investing activities (30,000)

3. Cash flows from financing activities:
Loan 20,000
Repayment of bank loan (5,000)
Payment of Dividends (26,000)
(11,000)
Net cash from financing activities
Net Cash Flow from all activities (A +B + C) (400)
Add: opening cash balance 4,000
Closing cash balance 3,600

Question 14:
The summarized balance sheet of Bhadresh Ltd. as on 31.12.05 and 31.12.2006 are
as follows:
Liabilities 2005 2006 Assets 2005 2006

Share capital 4,50,000 4,50,000 Fixed asset 4,00,000 3,20,000

General Reserve 3,00,000 3,10,000 Investment 50,000 60,000
P & l a/c 56,000 68,000 Stock 2,40,000 2,10,000
Creditors 1,68,000 1,34,000 Debtor 2,10,000 4,55,000
Tax provision 75,000 10,000 Bank 1,49,000 1,97,000
Mortgage loan ‐ 2,70,000

10,49,000 12,42,000 10,49,000 12,42,000

Additional Details:
1. Investment costing Rs. 8,000 were sold for Rs. 8,500
2. Tax provision made during the year was Rs. 9,000
3. During the year part of fixed assets costing Rs 10,000 was sold for Rs 12,000
and the profit was included in P & L A/c. You are required to prepare cash
flow statement for 2006.

Solution:
Cash flow statement for the year ended 31.12.2006
Particular Rs. Rs.

1.Cash flows from operating activities:

Net profit before tax (Rs. 28,500 in case Profit on 31,000
sale
on Investment & Fixed Asset not considered)
Adjustment for:
Dep. 70,000
Profit on sale of investment (500)
Profit on sale of Fixed assets (2,000)
Dec. in stock 30,000
Dec. in creditor (34,000)
Inc. in debtor (2,45,000)
 Income tax paid (74,000)

Net cash from operating activities (2,24,500)

2. Cash flows from investing activities:

Investment purchased (18,000)
Sale of investment 8,500
Sale of Fixed assets 12,000
Net cash from investing activities 2,500
3.Cash flows from financing activities:
Mortgage loan taken 2,70,000

Net Cash Flow from all activities (A + B + C) 48,000

Add: opening cash balance 1,49,000

Closing cash balance 1,97,000

Fixed Assets A/c

Particulars Rs Particulars Rs
To Balance b/d 4,00,000 By Bank a/c 12,000
To Profit and Loss a/c 2,000 By Dep. 70,000
By Balance c/d 3,20,000
4,02,000 4,02,000

Provision for tax A/c

Particulars Rs Particulars Rs
To Bank (tax paid 74,000 By Balance b/d 75,000
) To Balance c/d 10,000 By P & L A/c 9,000
(provision)
84,000 84,000

Investment A/c
Particulars Rs Particulars Rs
To Balance 50,000 By 8,500
b/d To P & L 500 Bank(sale) 60,000
A/c 18,000 By Balance
To Bank (purchase) 68,500 c/d 68,500

P & L A/c
Particulars Rs Particulars Rs
To Provision for 9,000 By Balance b/d 56,000
tax To Provision for 10,000 By Profit on sale of 500
G.R. To Balance 68,000 Inv. By Profit on sale 2,000
c/d of F.A. By Adjusted 28,500
87,000 Profit 87,000

Question 15: 
Compute Cash Flow from Operating Activities from the following:
     
 Closing Opening
Balances Balances
Particulars ( ) ()
Surplus, i.e., Balance in Statement of Profit and Loss 65,000 60,000
Trade Receivables:    
Debtors 67,000 1,02,000
Bills Receivable 1,03,000 62,000
General Reserve 2,37,000 2,02,000
Provision for Depreciation 30,000 20,000
Outstanding Expenses 12,000 30,000
Goodwill 70,000 80,000
     
     
An asset costing 40,000 having book value of 28,000 was sold for 36,000.

Solution:

Cash Flow from Operating Activities

Amount Amount
  Particulars ( `) ( `)
  Profit as per Statement of Profit or Loss 5,000  
  Add: Transfer to Reserve 35,000 40,000
  Profit before Tax and Extraordinary Items   40,000
  Items to be Added:    
     Depreciation (WN1) 22,000  
     Goodwill written off 10,000 32,000
  Items to be Deducted:    
  Profit on Sale of Asset   (8,000)
  Operating Profit before Working Capital Adjustments   64,000
  Less: Increase in Current Assets    
       Bills Receivables   (41,000)
  Add: Decrease in Current Assets    
       Debtors   35,000
  Less: Decrease in Current Liabilities    
        Outstanding Expenses   (18,000)
  Cash Generated from Operations   40,000
  Less: Tax Paid   Nil
  Net Cash Flows from Operating Activities   40,000

Working Note1:
Provision for Depreciation Account
Dr. Cr.
Amount Amount
Particulars ( `) Particulars ( `)
Asset A/c (40,000 –
28,000)* 12,000 Balance b/d 20,000
Profit and Loss A/c (Depreciation
Balance c/d 30,000 charged during the year) 22,000
  42,000   42,000
       
 
Amount
Particulars ( `)
Cost of Asset Sold 40,000
Less: Provision for
Depreciation* (12,000)
Book Value 28,000
 Less: Sale of Asset (36,000)
 Profit on Sale 8,000