jSucceed.

Sample Paper 07
OStoge i Proficiency Level 171

2 Long-term Borrowings
Particulars 2022 (3) 2021 ()

12% Debentures
12% Public Deposits 1.38.000 1.02,000
2.40.000 1,60,000
3,78,000 2,62,000
3 Property, Plant and Equipment
Build1ng
Plant 4,40.000 3,00,000
2,00,000 1,60,000
4 Trade Receivables 6,40,000 4,60,000
Debtors
Bills Recevables 1,50,000 1.20,000
18,000 16,000
1,68.000 1,36,000
Additional Information
i) Depreciation charged on building 20,000 and
plant
(ii) Interest paid on debentures 14,400, New debentures10,000.
of 36.000 were issued on Ist October,
2021.
(i) Interest paid on deposits from public 19,200
for
(a) Calculate operating profit before working capital the year.
(b) Show net increase/decrease in working capital. changes. [1]
(c) Prepare building and plant account. [1]
id) Calculate cash flow from investing [1]
le) Calculate cash flow from financing activity.
activity.
[1]
(f) [1]
Show the calculation of cash and cash equivalent at the end of the year. [1]
14. The following information is provided to you
Share capital 76,00,000
General reserve 71,20,000
15% Loan 73,00,000
Total assets ?20,00,000
Tax paid during the year 1,50,000
Profit after interest and tax 3,00,000
From the above information, calculate the following ratios
(i) Debt-equity Ratio
(ii) Return on Investment
(i) Interest Coverage Ratio [6]

Answers
1. (i) (b) Dr Partners' Capital Account Cr
Particulars Amt () Particulars Amt (3)
To Realisation A/c (Loss) 10,000 By Balance b/d 50,000
To Bank A/c (Final payment) 48.000 By Realisation A/c (Liability taken over) 8,000
58,000 58,000

(ü) (b)False. Partners' capital account may sometimes show adebit balance under fluctuating capital method.
(u) (c)partners who give the guarantee
172 OStage il Proficiency Level
Accounts 1
(iv) (b) Profit and Loss
To
Appropriation A/c
Profit and Loss A/c
Dr

(V) (d) Both Assertion (A) and Reason (R) are

false
(vi) The two contingent liabilities are
(a) Claim against the company not acknowledged as debt.
(b) Uncalled liability on shares partly paid.
( )QsClosing Balance = Opening Balance + Premium for Goodwill + Revaluation Profit
= 40,000 + 10,000* + 13,000 =63,000
*Q's sacrificing ratio=
2 3 6
Q'sshare in goodwill =60,000x
(viii)
6 -10,000
JOURNAL
Date LF Amt (Dr)
Particulars Amt (Cr)
General Reserves Alc D 80,000
To Provision for Doubtful Debts A/c 20,000
To X's Capital A/c 30,000
To Y's Capital A/c 30,000
(Being amount of general reserve adjusted at the admission of Z)
(ix ) JOURNAL
Date Particulars Amt (Dr) Amt (Cr)
Z's Loan A/c D 96,000
To Realisation A/c
72,000
To Bank A/c 24,000
(Being Z's loan was paid)
(x) The amount of securities premium can be utilised for the following
purposes
(a) Issuing fully paid-up bonus shares to the members.
(b) In purchasing itsown shares (buy-back).
2, S.No. Particulars Major Heads Sub-heads
Forfeited Shares Account Shareholder's Funds Subscribed Capital (Shown by way of addition)
(ü) Debentures Non-current Liabilities Long-term Borrowings
(in)Mining Rights Non-current Assets Property, Plant and Equipment and Intangible
Assets : Intangible Assets
(v) Sundry Debtors Current Assets Trade Receivables
(v)Interest Accrues and Due on Current Liabilities Other Current Liabilities
Secured Loans
(vi)Livestock |Non-current Assets Property, Plant and Equipment and Intangible
Assets : Property, Plant and Equipment
(vi) Outstanding Salary Current Liabilities Other Current Liabilities
(vi) Preliminary Expenses Reserves and Surplus Deducted from Security Premium Reserve
(Ix)Tax Reserve Shareholder's Funds Reserves and Surplus

Common Students usually record mining rights in 'properties, plant and equipment: tangible
assets' as mines
Mistake a tangible asset. But "rights" given by government to mine is an intangible asset and will
be shown
sub-head 'properties, plant and equipment: intangible assets'.
 Sample 173
sned Paper 07 OStage i Proficiency
Level

In the Books of Z Ltd.

Balance sheet
as at 31st March, 2022

EQUITY AND LIABILITIES

Particulars Note No. Amt )

1. Shareholders' Fund
0) Share Capital
16,000
(1) Reserves and Surplus 3600
2 Non-current Liabilities
Long-term Borrowings 20,000
3 Current Liabilities
Trade Paybles 1.200
Total
40,800
I|. ASSETS
1. Non-current Assets
(0) Proprerty, Plant and Equipment and Intang1ble Assets 32,000
2 Current Assets
) Inventories 800
(0) Trade Receivables 3,200
(in) Cash and Cash Equvalents 4,800
Total 40.800

4 JOURNAL
Date Particulars LF Amt (Dr) Amt (Cr)
Furniture A/c Dr 4,40,000
To Vindhyachal Ltd. 4,40,000
(Being furniture purchased)
Vindhyachal Ltd. Dr 2,20,000
To Bills Payable A/c 2.20,000
(Being bills payable accepted in part payment)
Vindhyachal Ltd. Dr 2,20,000
To 9% Debentures A/c (2,000x 100) 2,00,000
To Securities Premium A/c (2,000 x 10) 20,000
(Being debentures issued to Vindhyachal Ltd. in part payment)
Working Note
Amount due to Vindhyachal Ltd. 2,20,000 =72,000 debenture
Number of debentures issued =
Issue price per debenture l10

JOURNAL

Date Particulars LF Amt (Dr Amt (Cr)

2021
Dr 12,00,000
Apr 1 Bank A/c (1,00,000 x 12)
To Debenture Application and Allotment Alc 12,00,000
debentures @12)
(Being the application money received on 1,00,000, 8%
Debenture Application and Allotment Ac D 12,00,000
To 8% Debentures A/c (1,00,000 x 10) 10,00,000
To Securities Premium A/c (1.00,000 x 2) 2,00,000
account)
(Being application money transterred to debentures
2022
Dr 80,000
Mar 31 Debenture Interest A/c (10,00,000 x 87%)
To Debentureholders' A/c 80,000
(Being the interest pavable on8% debentures provided)
174 OStage Proficlency Level
Date
Accounts
Particulars LE
Amt (Dr)
Debentureholders Ac Dr Amt (Cr
To Bank Ac 80,000
(Being interest paid to 80 000-.
Statement of Profit anddebentureholders)
Loss Dr 80,000
To Debenture Interest Alc
(Being the debenture interest transterred to statement of profit and loss) 80 000
5.
JOURNAL
Date
Particulars Amt (Dr) Amt (C
Bank Alc Dr 8,40,000
To Ram's Capital A/c
To Premium for Goodwill A/c 6,00,000
(Being the amount of capital and goodwil/premium brought in cash) 2,40,000
Premium for Goodwill A/c Dr 2,40,000
To Raghav's Capital AWc
1,60,000
To Krishna's Capital Alc
80,000
(Being goodwillpremium credited to old partners in their sacrificing ratio
ie. 2:1)
Raghav's Capital A/c Dr 40,000
Krishna's Capital A/c Dr 20,000
To Bank Ac
60,000
(Being 1/4th of the goodwill premium withdrawn by old partners in cash)
Calculation of New Profit Sharing Ratio
Ram takes his share from Raghav=x-=;Ram takes his share from Krishna =x-=
34 12 6 3 4 12
Therefore, Raghav's new share =3 1_ 13 Krishna's new share 2--;Ram's share!
5 6 30 5 12 60 4

Therefore, new profit sharing ratio of Ragav, Krishna and Ram = 13 19,1_26:19:15
= 26:19:15
30 60 4 60
JOURNAL
Date Particulars LF Amt (Dr) Amt (Cr)
2023
Mar 14 General Reserve Ac D 10,000
To N's Capital A/c
10,000
(Being transter of N's share of general reserve to his capital accoOunt)
Interest on Captal Ac (7000 x100 365 Dr 700

To N's Capital A/c 700

(Being interest @ 5% per annum credited to N's capital account
upto 14th March, 2023)
Me Capital A/c 30,000
O's Capital A/c Dr 30,000
To N's Capital A/c 60,000
(Being goodwill adjusted in gaining ratio, ie. 1:1)
73
Profit and Loss Suspense Ac 90000 x 2 x Dr 12,000
365
To N's Capital Alc 12,000
(Being transter to N's share of profit to his capital account)
N's Capital A/c D 1,52,700
To N's Executor's A/c 1,52,700
(Being the transfer of amount due to N's executor's account)
 Sample Paper 07 175
OStoge I Proficlency Level
WorkingNotes
, Calculation of goodwill
AverageProfit Total Profit
Number of Years 80,000+ 90,000+\,00,000 -90,000
3
Goodwill of the Firm = Average
Profit x Number of Years'
N's share in goodwill =,80,000 y - Purchase =90,000 x2=1,80,000
3 =60,000
2. Timefrom the date of last balance sheet (3lst December, 2022) to the date of death (14th March, 2023)
=31 days of January + 28 days of February (2023 is not aleap year) +14 days of March
=73 days
JOURNAL
Date
Particulars LF Amt (Dr) Amt (Cr)
2021
Apr 1 Bank A/c (20,000 x 50) Dr 10,00,000
To Debenture Application A/c 10,00,000
(Being receipt of application money on 20,000 debentures @50 each)
Apr 1 Debenture Application A/c D 10,00,000
To 6% Debentures A/c 10,00,000
(Being application money transferred to 6% debentures
account)
Apr 1 Debenture Allotment A/c (20,000 x46) Dr 9,20,000
Loss on Issue of Debentures A/c (80,000+ 1,00,000) Dr 1,80,000
To 6% Debentures Alc (20,000x 50) 10,00,000
To Premium on Redemption of Debentures A/c (20,000 x 5) 1,00,000
(Being amount due @46 each on 20,000 debentures issued at 4%
discount and redeemable at 5% premium)
Apr 1 Bank A/c Dr 9,20,000
To Debenture Allotment A/c 9,20,000
(Being allotment money received)
2022
Mar 31 Securities Premium Ac Dr 50,000
General Reserve Ac Dr 1,00,000
Statement of Profit and Loss D 30,000
To Loss on Issue of Debentures A/c 1,80,000
(Being loss on issue of debentures written-of)

7
Profit and Loss Appropriation Account
for the year ended 31st March, 2021 Cr
Dr

Particulars Amt () Particulars Amt ()

By Net Profit as per Profit and
To Interest on Capital A/cs 3,60,000
Loss A/c
Sohan (3,00,000 x 5%) 15,000
29,000
( Rent to Sohan (50,000)
Mohan (2,80,000 x 5%) 14,000
12,000
( Interest on Loan (Mohan) (10,000)| 3,00,000
To Salary - Sohan (1,.000 x 12) By Interest on Drawings A/c
To Commission to Mohan 14,000
To Net Profit Transferred to Sohan 80.000% 2,000

Sohan's Capital A/c 1,24,250 5 6

Mohan's Capital A/c 1.24,250 2,48,500 Mohan (80000x i002 1,500 3,500

3.03,500 3,03,500
176 OStage Proficiency Level
Dr
Partners' Capital Account
AcCounts Clas jSucc

Particulars Sohan () Mohan ()

Particulars
Sohan () Mohan
To Drawings Ac
60000 By Balance b/d
To Interest on
To Balance c/d
Drawings A/c
80 000
2,000 1,500 By Interest on Capital A/c
3,80,750By Salary Ac
3.015,000
0,000| 2805
4,19,250
By Commission A/c
12.000
By Rent A/c
By interest on Loan Alc 50,000 14058,
14210058,
By Profit and Loss Appropriation Alc (Profit) 124 250
5,01,250 4,42,250 5,01.250 82.4228815,
Note Rent payable to Sohan and interest on loan pavable to Mohan may also be shown on the liabilties side
Value Points
" For interest on drawings, average period will be 6in the absence of any information.
" Rent to Sohan is acharge against profit and will be charged to profit and loss account and not to profit and.
appropriation account.
Dr
Realisation Account
Particulars Amt) Particulars
To Debtors Amt
4,700 By Creditors
To Stock
2,300 By Investment Fluctuation Fund 5.000
To Furniture 300
50By Cash A/c (Assets realised)
To Property 2,000 Property 1,500
To Investment 1,100 Stock 2,525
To Cash Ac (Creditors) 4.900 Debtors 4,200
To R's Cap1tal A/c 75 Furniture 50
Investment 1,100 9,375
By Loss on Realisation Transferred to
R's Capital A/c 253
K'sCap1tal A/c 197 150
15,125
15,125
Or Dr Realisation Account Cr
Particulars Amt () Particulars Amt ()
To Sundry Assets A/G By Sundry Liabilities Ac
Debtors 3,40,000 Creditors
Stock
1,50,000
1,50,000 By Bank Alc (Assets realised)
Furniture 4,60,000 Debtors 3,23,000
Machinery 8,20,000 17,70,000 Stock
65,000
ToBank A/c (Liabilties paid) Machinery 74,000 4,62,000
Creditors 1,50,000 By
Hanif's Current Ac (Stock) (75,000- 7,500) 67,500
To Hanif's Current A/C 8,000 By Jubed's Current Alc (Furniture)
(Realisation expenses) 1,35,000
By Loss Transferred to Current A/cs
Hanif
7,42,333
Jubed
3,71,167 11,13,500
19,28,000 19,28,000
9. (a) JOURNAL
Date Particulars LF Amt (Dr) Amt (Cr)
Equity Share Application and Allotment A/c D 11,20,000
To Equity Share Capital A/c (1,.00,000 x 5) 5.00,000
To Securities Prermium A/c (1,00,000 x 3) 3,00,000
To Calls-in-advance A/c (40,000 x 8) 3,20,000
(Being transter of applicat1on and allotment money)
 Sample Paper 07
177
OStage i Proficiency Level
Date
Cautv Share First and Final CalParticulars LF Amt (Dr) Amt (Cr)
ToEquity Share CapiBtal A/c A/c (1,00,000 x7) Dr 7,00,000
To Securities (1,00,000 x5) 5,00,000
Premium A/c (1.00,000 x 2)
(Reing first and final call due on 2,00,000
1,00,000 shares)
Calls-in-arrears A/c (WN1)
To Equity Share First and Dr 1,900
Final Call A/c 1,900
(Being amount not received on call)
Calls-in-advance A/c
To Equity Share First and D 3.20,000
Final Call Alc 3,20,000
(Being calls-in-advance adjusted to
share first and final call account)
Equity Share Capital A/c (500 x 10)
D 5,000
Securities Premium A/c (500 x 2)
To Calls-in-arrears Ac Dr 1,000
(1,300 + 600) 1,900
To Share Forfeiture Alc
(Being forfeiture of 300 shares of Xand 200 4,100
non-payment of call money) shares of Yfor
Share Forfeiture Ac
D 4,100
To Capital A/c
4,100
(Being balance of share forfeiture transferred to capital reserve)
Working Notes
1. (i) Number of shares applied by X=*80,000 X300 =400
60,000
Number of shares applied by Y= 60,000 X200= 300
40,000
Excess amount received from X= 400 shares - 300 shares =100 shares x 8=* 800
Excess amount received from Y=300 shares - 200 shares =100 shares x 8= 800
(ii) Amount due from Xand Yon first and final call Amt ()
X=300 shares @7 2,100
Y= 200shares @7 1,400
3,500
(-) Excess received on application and allotment from Xand Y(800 + 800) (1,600)
Amountdue but not paid on first and final call 1,900
2. Since, the question issilent as to the utilisation of exxcess application and allotment money from Xand Y,
it has been assumed that the entire excess application and allotment money is exclusively for share capital
and hence, securities premium account has been debited in the entry for forfeiture.
(b) Dr Cash Book Cr

Particulars Amt () Particulars Amt ()

To Equity Share Application and By Equity Share Application and

Allotment A/c (1,50,000 x 8) 12,00,000 Allotment A/c (Refund of applications 80,000
3.78,100 for 10,000 shares @8 per share)
To Equity Share First and Final Cal A/c
(7,00,000-3,20,000 -1,900) By Balance c/d
15,04,100
To Equity Share Capital A/c 5,000

To Securities Premium Alc 1,000

15,84,100 15,84,100
178 OStoge i
Proficiency Level
Or
Accounts
JOURNAL
Date
Particulars Amt (Dr)
Bank A/c (40,000 x 40) Dr
Arnt (C
16.00.000
To Share
Application A/c
(Being application money receved on 40,000 shares)
Share Application Ac D
1600000
16.00,000
To Share Capital A/c
To Securities Prernium(30.000
x 30)
Alc (30.000 x 10) 9.00000
To Share
Allotment Alc 300.000
To Bank Ac 200.000
(6eng application money transterred to share capital account, 200000
premium account and the excess moneytransferred to share securites
account and returned to rejected aliotment
Share Alotrnent A/c
applicants)
D 9.00.000
To Share Capital A/c
(30.000 x 20)
To Securities Prernium A/c
(30,000 x 10) 600.000
(Being money due on allotment) 3.00.000
Bank Alc WN 2) Dr
To Share 6,86.000
Allotment A/c
(Being amount received in alotment) 6.86.000
(V Share Capital A/c (600 x 50) Dr 30,000
Securities Premium A/c (600x 10) D 6,000
To Share Allotment A/c (600x 30-
4,000 EM)
To Share Forfeiture A/c (600x 30 + 4,000 EM) 14.000
(Being forfeiture of 600 shares of Rohan for non-payment of 22000
allotment money)
Share First Call A/c (29,400x 30) D 8,82,000
To Share Capital AC
8 82,000
Being first call rnoney due on 29,400 shares)
(vi) Bank A/c (WN 4) D
To Share First Call A/c
8,55,000

(Being first call money received on 28,500 shares) 8.55,000

(viin) Share Capital A/c (900 x 80) Dr 72,000
To Share First Call Ac (900x 30)
To Share Forfeiture A/c (900 x 50) 27,000
45,000
(Being forfeiture of 900 Aman's shares)
(X Share Second and Final Call A/c
Dr 5,70.000
To Share Capital A/c (28,500x 20)
(Being second and final call money due on 28,500 shares) 5,70.000
Bank A/c
Dr 5,70,000
To Share Second and Final Call A/c
5.70.000
(Being due money received)
(X Bank A/c (1,000 x 80)
Dr 80,000
Share Forteiture A/c (1,000 x 20)
Dr 20,000
To Share Capital A/c (1.000 x 100) 1.00.000
(Being re-issue of 1,000 forfeited shares)
(Xi Share Forfeiture A/c (WN 5) Dr 28,667
To Capital Reserve Ac 28.667
(Being profit on 1,000 re-isSued shares transferred to capital reserve)

Working Notes
1. Excess amount received on Rohan's application
Rohan has been allotted = 600 shares
He must have applied for (35,000,
30,000
600 =700 shares
 179
0succeed
. Sample Paper 07 OStoge i Proflciency Level

Amt (Zj
Amount reccived from Rohan (700 y 40) 28,000
Amount adjusted on application (600 y 40) (24,000)
Amountadjusted on allotment 4,000
Money duc on allotiment (600 x 30) 18,000
Moncy adjusted (4,000)
Balance due on allotment 14,000
2. Amount received on allotment
Total amount due on allotment (30,000 30) 9,00,000
Amount reccived on application (2,00,000)
7,00,000
Amount not reccived on Rohan's share (14,000)
6,86,000
30,000
3. Aman's allotted shares 1,050x 900 shares
35,000
4. Money received on first call
First call money due on 29,400 shares (29,400 x 30) 8,82,000
Application moncy not received on 900 shares (900 x 30) (27,000 )
8,55,000
5. 1,000 shares have been re-issued including 900 shares of
Aman and balance 100shares of Rohan
Profit on 100 shares
(22,000
3,667
600
Profit on 900 shares 45,000
48,667
(- Loss on issue of 1,000 shares (20,000)
28,667
10. (a) Let the profits be I
Remaining share =| -=2
4 4
33 9
Madan's new share =X =
5 4 20
23 6
Mohan's new share ==x=
5 4 20
I5_5
Gopal's share =->x
4 5 20

New ratio =9:6:5

Revaluation Account
(b)Dr
Particulars Amt (3) Particulars Amt )
5,000 By Accrued Income A/c 500
To Investment A/c
By Bad Debts Recovered A/c 800
To Profit Transferred to
Madan's Capital A/c 780 By Patents A/c 5,000
520 1,300
Mohan's Capital Ac
6.300 6.300

D
Partners' Capital Account Cr

Madan Mohan Gopal Madan Mohan

Particulars ( (3)
Particulars
(3) () Gopal
R)

To Balance c/d 93,780 62,520 52,100 By Balance b/d 60,000 40.000

By Premium for Goodwill A/c 15 000 10,000
By General Reserve A/c 12,000 8,000
180 OStage i Proficlency Level
Accounts Ca
Madan Mohan Gopal Particulars Madan Mohan Gopal
Particulars (3
By Workmen Compensation
6,000 4,000
Fund A/c
By Revaluation A/c (Profit)
780 520

By Bank Ac
93.780 62,520 52.100
52,.100
93,780 62,520 52.100

Balance Sheet
as at Ist April, 2021
Assets
Liabilities Amt () Amt (?)
Workmen Compensation Fund 2.000 Accrued Income
500
Creditors 28.000 Investment 50,000
Capital Ales (- Decrease in Value (5,000) 45,000
Madan Patents 10,000
93.780
Mohan (+) Undervalued 5,000
62,520 15.000
Gopal 52,100 2,08,400 Bank
87,900
Debtors 65,000
(- Provision for Doubtful Debts (5,000) 60,000
Stock
30,000
2,38,400 2,38,400
Working Note
Calculation of adjustment of capital Amt ()
Adjusted capital of Madan 93,780
Adjusted capital of Mohan 62,520
1,56,300
Gopal's share in new firm =th
4

Remaining share =] --*

4
4-1_3
4 4
Capital of Madan and Mohan for th share = l,56,300
4

So, total capital =1,56,300 x = 2,08,400

3

Gopal's capital = 2,08,400 x4 = 52,100

(C) Dr Bank Account
Cr
Particulars Amt ()
To Balance b/d
Particulars Amt ()
10,000 By Balance c/d
To Bad Debts Recovered A/c 87,900
800
To Premium for Goodwill A/c 25,000
To Gopal's Capital Al 52,100
87.900
87,900

Common Students may deduct R1,000 as bad debts from debtors.

Mistake hence it is previously recorded as bad debts and should These
not be bad debts from
deducted are not
theof debtors
current and
yedl 800
will be added back to cash at bank.
 / Sample Paper 07 OStage ll Proficiency Level
181

Particulars
Revaluation Account Cr

Amt () Particulars
Amt ()
ToBad Debts Alc
16,000 By Plant and Machinery Alc 8,80,000
To Provision for Doubtful Debts Alc
To Stock A/c 60,000 By Sundry Creditors A/c 56,000
80,000
To Furntiure A/c
80,000
ToGain (Profit) Transterred to
A's Capital A/c
4,20,000
B's Capital Alc
2,80,000
9,36,000 9,36,000

D Partners' Capital Account C

Particulars A) B() C() C
Particulars A () B()
ToBalancecd 86,40,000 57,60,000 36,00,000 By Balance b/d 36,80,000 27,20,000
By Revaluation A/c (Gain) 4,20,000 2,80,000
By Bank Ac 36,00,000
By C's Current A/c 4,80.000 3,20,000
By Bank A/c (Deficit) 40,60,000 24.40,000
86,40,000 57,60,00036,00,000 86,40,000 57.60.000 36,00,000

Balance Sheet (After admission of C)

as at...
Liabilities Amt () Assets Amt )
Capital A/cs Plant and Machinery 32,80,000
A 86,40,000 Furniture 27,20,000
3 57,60,000 Stock 1,44,000
36,00,000 Debtors 12,80,000
Sundry Creditors 9,44,000(-)Bad Debts (80,000)
Bils Payable 2,00,000 12,00,000
|(-)Provisionfor Doubtful Debts (60,000) 11,40,000
C's Current Account 8,00,000
Cash at Bank 1,10,60,000
1,91,44,000 1,91,44,000

(ii) A's sacrifice : 2,1_5 A'snew share =

5 5 20-5 15 5 75
84 32' 8 3232 5 160
32

3. 1 3 3 3 15-3 12 4 48
S's sacrifice =x== S's new share =
85 40 8 40 40 40 4 160
5 3 25+12 37
M's share =+
32 40 160 160
New ratio =75:48:37
. (i) (c) The acquisition of machinery by issue of equity shares will not be considered while preparing cash flow
Statement as there is no flow of cash.
(ü) (c) Useful for intra-firm analysis
) Debt =2,00,000+l,00,000 = 3,00,000
1otal of Balance Sheet =3.60.000+ 90,000= 4,50,000
Lquity =4,50,000- 3,00,000-50,000= *1,00,000
Debt 3,00,000
Debt to Equity Ratio= Equity 1,00,000-=3:1
182 OStage Proflclency Level
(iv) Net profit after tax 70,000
Accounts
(+) Goodwillwritten-off 10,000
Loss on sale of machinery 3,000
83,000
(v) financial decisions
Financial statement analysis is usefultofinance manager for taking for the
-12.
It provided adequate information for financial planning.
Common Slze Balance Sheet
busines,
as at 31st March, 2022 and 2021
Absolute Amount %of Balance
Note
Sheet Total
Particulars
No. 31st March, 31st March, 31st March,
31st March,
2021 (3) 2022 () 2021 (%)
1. EQUITY AND
2022 (%
LIABILITIES
1. Shareholders' Funds
(0) Share Capital 32,00,000 33,00,000 57.14
5789
() Reserves and Surplus 5,00,000 2,00,000 8.93 3.51
2. Non-current Liabilities
Long-term Borrowings 14,00,000 16,00,000 25.00 28.07
3. Current Liabilities
Trade Payables 5,00,000 6,00,000 8.93
Total 10.53
56,00,000 57,00,000 100
I. ASSETS
100
1. Non-current Assets
(0) Property, Plant and Equipment and
Intangible Assets 35,00,000 40,00,000 62.50 70.17
(i) Non-current Investments 6,00,000 6,00,000 10.71 10.53
2. Current Assets
(0) Current Investments 5,00,000 4,00,000 8.93 70.17
(ii) Inventories 8,00,000 6,00,000 14.29 10.53
(üj) Cash and Cash Equivalents
2,00,000 1,00,000 3.57 1.75
Total
56,00,000 57,00,000 100 100

13. Calculation of Net Cash Flow from Operating Activities

Particulars
Amt ()
Cash Flow from Operating Activities
Net Profit before Tax (WN 1)
2,08,000
Adjustments for
(+) Depreciation on Property, Plant and Equipment 30,000
Loss on Sale of Machinery (WN 2) 10,000
Interest on Debentures ((75,000 x 8/100) + (55,000 x 8/100 x 6/12))
8,200
Interest on Bank Loan [(25,000x 8/100 x 6/12) +(20,000 x 8/100 ×6/12)1 1,800
GoodwillAmortised 12,500
Premium on Redemption of Preference Shares 2,500 65,000
Operating Proft before Working Capital Changes 2,73,000
(+) Decrease in Current Assets and Increase in Current Liabilities
Trade Payables 5,000
(-) Increase in Current Assets and Decrease in Current Liabilities
Inventories (42,500)
(47,500)
Net Cash Flow from Operating Activities before Tax 2,30,500
( Tax Paid (WN 3) (17,500)
Net Cash Inflow from Operating Activities after Tax 2,13,000
jSueceedSample Paper 07 183
OStagei Proficiency Level
Working Notes

Calculation of Net Profit before Tax

Net Profit as per Statement of Particulars Ant
Profit and Loss (75.000 + 70 000) 145000
(+) Transfer to Reserve
e) Dividend on Equity Shares 15.000
-) Dividend on Preference Shares 18.000
(+) Provision for Tax 7500
Net Profit before Tax 22.500
2,08,000
2. Dr
Property, Plant and Equipment Account Cr
Particulars Amt () Particulars Amt
To Balance b/d
To Bank A/c (Purchases) 3,10,000 By Depreciation A/c 30,000
(Balancing figure) 1,70.,000By Bank A/c (Sale) 10.000
By Loss on Sale A/c 10.000
(Statement of profit and loss)
By Balance c/d
4,30.000
4,80,000 4.80.000
3. Dr
Provision for Tax Account Cr
Particulars Amt () Particulars Amt )
To Bank A/c (Balancing figure) 17,500 By Balance b/d 20,000
To Balance c/d
25,000 By Provision for Tax Ac 22500
(Statement of profit and loss)
42,500 42.500
Or (a) Particulars Amt
Net Profit as per Statement of Profit and Loss
Adjustments for
(1,40,000-1,00,Co) 40,000

(+)Goodwill Written-off 10,000

Depreciation on Building 20,000
Depreciation on Plant 10,000
Interest on Debentures
14.400
Interest on Public Deposits
19.200 73.600
Operating Profit before Working Capital Changes 1,13,600
(b) Calculation of Working Capital
Particulars
Amt ()
Decrease in Current Assets and Increase in Current Liabilities
Inventories 6,000
Prepaid Expenses 4.000
Creditors 4.000 14.000
H Increase in Current Assets and Decrease in Current Liabilities
Debtors (30,000)
Bills Receivables (2.000)
OutstandingExpenses (4.000) (36,000)
Decrease in Working Capital (22,000)
(C D Building Account Cr
Particulars Amt () Particulars Amt ()
To Balance b/d 3,00,000By Depreciation Alc 20,000
To Bank A/c (Purchase) (Balancing figure) 1.60,000By Balance c/d 4,40,000
4,60,000 4,60.000
184 OStage i Proficiency Level
Accountsc
D Plant Account
Particulars Amt () Particulars Amt ()
Depreciation A/c
To Balance b/d 1.60,000 By 10,000
To Bank Ac (Purchase) (Balancing figure) 50.000 By Balance c/d 2,00,000
2.10,000 2,10,000
Activities
(d) Cash Flow from Investing
Particulars Amnt (
Cash Flow from Investing Activities
Cash Payment for Building (1,60,000)
Cash Payment for Plant (50,000)
Net Cash Used in Investing Activities (2,10,000)
(e Cash Flow from Financing Activities
Particulars
Amt (
Cash Fiow from Financing Activities
Decrease in Cash Credit (4,000)
Cash Proceeds from lssue of Equity Shares 60,000
Cash Proceeds from Issue of Debentures 36,000
Cash Proceeds from Public Deposits 80,000
Interest on Debentures Paid (14,400)
Interest on Public Deposits Paid (19,200)
Net Cash from Financing Activities 1,38,400
(f) Particulars Amt )
Net Increase in Cash and Cash Equivalents [1,13,600 - 22,000 + (2,10,000) + 1,38,400] 20,000
(+) Cash and Cash Equivalents in the Beginning of the Year 80,000
Cash and Cash EqUivalents at the End of the Year 1,00,000

Long-term Debts 15% Loan

14. (i) Debt-equity Ratio =Shareholders' Funds Share Capital + General Reserve + Profit
3,00,000 3,00,000
6,00,000 +1,20,000 +3,00,000 10,20,000
Debt-equity Ratio = 0.29:1
Profit before Interest, Tax and Dividend
(ii) Return on nvestment = x100
Capital Employed
4,95,000 x 100
10,20,000
Return on Investment = 48,53%
Profit before Interest and Tax =Profit after Interest and Tax + Interest + Tax
= 3,00,000 + (3,00,000 x 15%) + 1,50,000
=3,00,000 +45,000+ 1,50,000= 4,95,000
Profit before Interest and Tax 4,95,000
(iiü) Interest Coverage Ratio
Interest on Long-term Deb 45,000
Interest Coverage Ratio =l| times