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6 summarized Balance Sheets of S Ltd. as on 31st March, 2008 and 2009.

Following are the


Prepare Funds Flow Statement.
Liabilities 2009 2008 Assets 2009 2008
Share Capital 2,50,000 2,00,000 Land and 1,90,000 2,00,000
Building
General 60,000 50,000 Machinery 1,69,000 1,50,000
Reserve
P&L A/C 30,600 30,500 Stock 74,000 1,00,000
Debentures - 70,000 Debtors 64,200 80,000
Creditors 1,35,200 1,50,000 Bank and cash 8,600 500
Provision for 35,000 30,000 Goodwill 5,000 -
tax
5,10,800 5,30,500 5,10,800 5,30,500
st
During the year ended 31 March, 2009:
Dividend of Rs. 23,000 was paid.
Assets of another company were purchased for a consideration of Rs. 50,000 payable in
shares: Stock Rs. 20,000, Machinery Rs. 25,000.
Depreciation written off machinery was Rs. 12,000.
Income tax provided during the year was Rs. 33,000.
Loss on sale of machine Rs. 200 was written off to General Reserve.
Machinery for Rs. 8,000 was purchased.
Ans. Total of FFS: Rs. 1,29,000, Decrease in WC : Rs. 38,900, FFO: Rs. 78,300

7 The following details relate to X Ltd.


Debtors' Velocity 3 Months
Stock Velocity 8 Times
Fixed Assets Turnover Ratio 8 Times
Creditors' Velocity 2 Months
Capital Turnover Ratio 2.5 times
Gross Profit Turnover Ratio 25%
Gross profit for the year amounted to Rs. 80,000. There is no long-term loan or overdraft.
Reserves and Surplus amounted to Rs. 28,000; Liquid Assets are Rs. 97,333. Closing stock is
Rs. 2,000 more than the opening stock. Bills receivable amounted to Rs. 5,000 and Bills
payable are Rs. 2,000.
Find out:
(a) Sales (b) Sundry Debtors
(c) Closing Stock (d) Sundry Creditors
(e) Fixed Assets if) Proprietor's Fund.
Also make out the Balance Sheet with as many details as possible.
Ans. Sales: Rs. 3,20,000; Sundry Debtors: Rs. 75,000; closing stock: Rs. 31,000;
creditors;: Rs. 38,333; fixed assets Rs. 40,000; Proprietor’s fund: Total capital Rs.
1,28,000 inclusive of reserves of Rs. 28,000. Total of B/S Rs. 1,68,33
8 Following is the Profit and Loss Account of a company for the year ending 31.3.09
PROFIT AND LOSS ACCOUNT for the year ending 31.3.2009
Particulars Rs. Particulars Rs.
To Opening Stock 1,00,000 By Sales 5,60,000
To Purchases 3,50,000 By Closing Stock 1,00,000
To Wages 9,000
To Gross Profit c/ d 2,01,000
6,60,000 6,60,000
To Administrative Expenses 20,000 By Gross Profit b / d 2,01,000
To Selling Expenses 89,000 By Non-Trading Income 18,000
To Non-Trading Expenses 30,000
To Net Profit 80,000
2,19,000 2,19,000
Calculate:
GP Ratio [Ans. 35.89%]
Net Profit Ratio [Ans: 14.29%]
Operating Profit Ratio [Ans. 16.43%]

9 Balance Sheets of a firm as on 1st January 2008 and 31st December 2008 were as
follows:
Liabilities 1.1.2008 31.12.2008 Assets 1.1.2008 31.12.2008
Rs. Rs. Rs. Rs.
Creditors 40,000 44,000 Cash 10,000 47,000
Loan from X 25,000 - Debtors 30,000 50,000
Loan from Y 40,000 50,000 Stock 35,000 25,000
Capital 1,25,000 1,53,000 Machinery 80,000 55,000
Land 40,000 10,000
Building 35,000 60,000
2,30,000 2,47,000 2,30,000 2,47,000
During the year a machine costing Rs.10,000 (accumulated depreciation Rs. 3,000) was sold for
Rs. 5,000. The balance of provision for depreciation against machinery as on 1st January 2008
was Rs. 25,000 and on 31st December 2008 Rs. 40,000. Net profit for the year 2008 amounted to
Rs.45,000. Prepare Cash Flow Statement.
Ans. Cash Flow from operating activities: Rs. 59,000; Cash Flow from financing
activities: Rs.-32,000; Cash Flow from investing activities: Rs. 10,000
10 X Ltd. supplies you the following, Balance Sheets for the year ending 31.12.2007 and
31.12.08.
Liabilities 31.12.07 31.12.08 Assets 31.12.07 31.12.08
Share Capital 70,000 74,000 Bank Balance 9,000 7,800
10% Bonds 12,000 6,000 Sundry Debtors 14,900 17,700
Sundry Creditors 10,360 11,840 Inventories 49,200 42,700
Provision for Land 20,000 30,000
700 800
doubtful debts Goodwill 10,000 5,000
P/LA/c 10,040 10,560 --
1,03,100 1,03,200 1,03,100 1,03,200
Additional Information:
(a) Dividend paid during 2008, was Rs. 3,500.
(b) Land purchased for Rs. 10,000.
(c) Goodwill written off Rs. 5,000
(d) Bonds Rs. 6,000 redeemed during 2008.
Prepare Cash Flow Statement for the year-ended 31.12.08.
Ans. Cash Flow from operating activities: Rs. 14,300; Cash Flow from investing
activities: Rs. -10,000; Cash Flow from financing activities: Rs. -5,500

11 The following is the summary of financial ratios of a company relating to its liquidity
position
Particulars Year 1 Year 2 Year 3
Current Ratio 2.00 2.13 2.28
Acid Test Ratio 1.20 1.10 .90
Debtors Turnover 10.00 8.00 7.00
Stock Turnover 6.00 5.00 4.00
The current ratio is increasing, while the acid test ratio is decreasing. Explain the contributing
factors for this apparently divergent trend

12 The directors of Precision Tools Ltd. are worried at deteriorating financial position of the
company. The company has utilized full overdraft facility from the bank and is still not able to
pay its creditors on due dates, although profits earned are satisfactory
The following are the balance sheets as on March 31 for the recent 2 years.

Previous Year Current Year


Share Capital: shares of Rs.10 10,00,000 10,00,000
each fully paid
P&L Appropriation A/c 60,000 80,000
Overdraft from Bank 1,60,000 6,00,000
Creditors 2,00,000 6,00,000
14,20,000 14,20,000
Land and Building 3,00,000 5,00,000
Plant and Machinery 5,00,000 6,00,000
Less Depreciation 1,20,000 3,80,000 1,80,000 4,20,000
Vehicles 1,16,000 1,24,000
Less Depreciation 56,000 60,000 84,000 40,000
Stock 2,20,000 7,20,000
the year ,a dividend of 10% was distributed to the shareholders. On 1 st April of the current year, a
motor car, which originally cost Rs.20,000,and showed a book value of Rs. 10,000 was sold for Rs.
16,000.
You are required to prepare a cash flow statement based on AS-3.
Ans. Cash Flow from operating activities: Rs. 4,12,000; Cash Flow from investing
activities: Rs. -3,12,000; Cash Flow from financing activities: Rs. -1,00,000

13 The XYZ Ltd. financial statement contains the following information:


Balance Sheet as n 31st march, current year
Particulars Previous Year Current Year
(in thousand) (in thousand)
Cash 200 160
S.Debtors 320 400
Temporary Investments 200 320
Stock 1,840 2,160
Prepaid Expenses 28 12
Total Current Assets 2,088 3,052
Total Assets 5,600 6,400
Current Liabilities 640 800
15% Debentures 1,600 1,600
Eq.Share Capital 2,000 2,000
Retained Earnings 468 904
Statement of Profits year ended March 31, Current Year
Particulars Rs.(in thousand)
Sales 4,000
Less:Cost of goods sold 2,800
Less: Interest 160
Net profit for current year 1,040
Less:Taxes 364
EAT 676
Dividend Declared on Eq. Shares 220
From the above, appraise the financial position of the company from the point o0f view of (a)
Liquidity (b) solvency(c) profitability (d) activity
Ans. The company’s position is sound from all the three aspects but the activity ratios do
not seem to be adequate

14 A person require Rs. 20,000 at the beginning of each year from 2010 to 2014. How
much should he deposit at the end of each year from 2000 to 2005? The interest rate is
10 percent.
Ans. Person should deposit Rs. 7069 at the end of each year from 2000 to 2006.
15 Mr. Sourabh receives a provident fund amount of Rs. 1,00,000. He deposits it in a bank
which pays 10 per cent interest. If he withdraws annually Rs. 20,000 how long can he do
so?
Ans. Mr. Sourabh can withdraw Rs. 20,000 annually for 7 years

16 Balance Sheets of A Ltd. as on 1.1.2010 and 31.12.2010


Liabilities 1.1.2010 31.12.201 1.1.2010 31.12.2010
(Rs.) 0 (Rs.) (Rs.)
(Rs.)
Creditors 40,000 44,000 Assets 10,000 7,000
Mrs. A’s Loan 20,000 - Cash 30,000 50,000
Loan from Bank 40,000 50,000 Debtors 35,000 25,000
Capital 1,25,000 1,53,000 Stock 80,000 55,000
Machinery 40,000 50,000
Land 35,000 60,000
Building
2,30,000 2,47,000 2,30,000 2,47,000
During the year a machine costing Rs. 10,000 (Accumulated depreciation Rs. 3,000) was sold for
Rs. 5,000. The provision for depreciation against machinery as on 1.1.2010 was Rs. 25,000 and
on 31.12.2010 Rs. 40,000. Net profit for the year 2010 amounted to Rs. 45,000.

You are required to prepare a Cash Flow Statement.


Ans. Cash Flow from Operating Activities – 87,000/-
Cash Flow from Investing Activities – 52,000/-
Cash Flow from Financing Activities – 50,000/-

17 Compute cash from operations from the following details:


31 Dec.2007 31 Dec. 2008
Debtors 50,000 47,000
Bills receivable 10,000 12,500
Creditors 20,000 25,000
Bills payable 8,000 6,000
Outstanding expenses 1,000 1,200
Prepaid expenses 800 700
Accrued expenses 600 750
Income received in advance 300 250
Profit made during the year - 1,30,000

Ans. CFO = 133700

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