Preparation of Income Statement/ Statement of … · Web viewPrepare a multi-step income statement for the M/s. APP Trading Corporation (a clothing retailer) for the year ending December

FRSA Module 3 – Problems and Solutions

Preparation of Income Statement/ Statement of Profit and Loss

Q.No.1

From the following information, prepare Statement of Profit and Loss for the year ended 31st March 2019

Particulars (Rs. In Lacs)Revenue from Operations 2605Other Income 40Cost of Materials Consumed 1000Changes in Inventories (275)Employee Benefit Expenses 850Finance Cost 20Depreciation and Amortization Expense 150Other Expenses 100Tax Rate @ 30%

Solution

Part – IIName of the Company: ………………

Profit and Loss Statement for the year ended:……… (` in ……..)

Particulars Note No. Note No.

Amount (Rs.)

I Revenue from Operations 2605 II Other Income 40 III Total Revenue (I+II) 2645

IV

Expenses: Cost of Materials Consumed 1000 Purchases of Stock-In-Trade 0 Changes in Inventories of Finished Goods / Work- in-progress and Stock-In-Trade (275)

Employee Benefits Expense 850 Finance Costs 20 Depreciation and Amortization Expense 150 Other Expenses 100 Total Expenses 1845

V Profit before Exceptional & Extraordinary Items and Tax (III – IV) 800

VI Exceptional Items 0 VII Profit before Tax (VII-VIII) 800

VIIITax Expenses: (240)(1) Current Tax (2) Deferred Tax

IX Profit / (Loss) for the period 560

XEarnings per Equity Share: (1) Basic


(2) Diluted Q.No. 2

The following is the Financial data extracted from the ledger balances of M/s. Toys Co. Ltd for the Year ended 31st March 2018.

Particulars Rs. (in Lacs)Sales Revenue 4855Cost of Materials Consumed 2500 Purchases of Stock-In-Trade 350 Depreciation and Amortization Expense 125 Other Expenses 120 Other Income 225 Changes in Inventories of Finished Goods 300 Employee Benefits Expense 550 Finance Costs 50 Tax @ 25%

Solution



Particulars Note No. Note No. Amount (Rs.)

I Revenue from Operations 4855 II Other Income 225 III Total Revenue (I+II) 5080

IV

Expenses: Cost of Materials Consumed 2500 Purchases of Stock-In-Trade 350 Changes in Inventories of Finished Goods / Work- in-progress and Stock-In-Trade (300)

Employee Benefits Expense 550 Finance Costs 50 Depreciation and Amortization Expense 125 Other Expenses 120 Total Expenses 3395



VIIITax Expenses: 421 (1) Current Tax (2) Deferred Tax

IX Profit / (Loss) for the period 1264 X Earnings per Equity Share:


(1) Basic (2) Diluted

Q.No.3

From the following figures, prepare an Income Statement for M/s. PW Audio Supply, Inc., for the year ended December 31,2012

Sales Revenue 480000 Depreciation Expense 8000Sales Returns 12000 Freight 7000Sales discounts 8000 Insurance 2000Cost of Goods Sold 316000 Interest revenue 3000Salaries & Wages Expenses 64000 Gain on disposal of plant 600Utilities Expenses 17000 Interest Expense 2000Advertising Expense 16000 Tax @ 25%

Solution:


Profit and Loss Statement for the year ended:……… (` in ……..)Particulars Note No. Note No. Amount (Rs.)

I Revenue from Operations 1 460000 II Other Income 2 3600 III Total Revenue (I+II) 463600

IV

Expenses: Cost of Materials Consumed 316000 Purchases of Stock-In-Trade 0 Changes in Inventories of Finished Goods / Work- in-progress and Stock-In-Trade 0

Employee Benefits Expense 64000 Finance Costs 2000 Depreciation and Amortization Expense 8000 Other Expenses 3 42000 Total Expenses 432000





XEarnings per Equity Share: (1) Basic


(2) Diluted

Note 1: Revenue from OperationsSales Revenue 480000 Less: Sales Returns (12000)Less: Sales Discounts (8000) 460000

Note 2: Other IncomeInterest Revenue 3000 Gain on disposal of Plant 600 3600

Note 3: Other ExpensesUtilities Expenses 17000 Advertising Expenses 16000 Freight 7000 Insurance 2000 42000


Q.No.4

From the following figures, prepare an Income Statement for M/s. FALCETTO Company, for the year ended December 31,2012

Sales Revenue 536800 Depreciation Expense 9000Sales Returns 6700 Freight 7600Sales discounts 5000 Insurance 4500Cost of Goods Sold 363400 Interest revenue 2500Salaries & Wages Expenses 56000 Gain on disposal of plant 500Utilities Expenses 18000 Interest Expense 3600Advertising Expense 12000 Rent Expense 24000Tax Expense 1000

Solution:Part – II

Name of the Company: ………………Profit and Loss Statement for the year ended:……… (` in ……..)



IV

Expenses: Cost of Materials Consumed 363400 Purchases of Stock-In-Trade 0 Changes in Inventories of Finished Goods / Work- in-progress and Stock-In-Trade 0






XEarnings per Equity Share: (1) Basic (2) Diluted



Note 2: Other IncomeInterest Revenue 2500 Gain on disposal of Plant 500 3000

Note 3: Other ExpensesUtilities Expenses 18000 Advertising Expenses 12000 Freight 7600 Rent Expenses 24000 Insurance 4500 66100

Q.No.5

Prepare a multi-step income statement for the M/s. APP Trading Corporation (a clothing retailer) for the year ending December 31, 2018 given the information below:

Advertising expenditures 68,000 Management salaries 240,000

Beginning inventory 256,000 Materials purchases 2,425,000

Depreciation 78,000 R&D expenditures 35,000

Ending inventory 248,000 Repairs and maintenance costs 22,000

Gross Sales 3,210,000 Returns and allowances 48,000

Interest expense 64,000 Taxes 51,000Lease payments 52,000

Solution:



Particulars Note No. Note No. Amount (Rs.)I Revenue from Operations 1 3162000 II Other Income 0 III Total Revenue (I+II) 3162000 IV Expenses:


Cost of Materials Consumed 2 2433000Purchases of Stock-In-Trade 2 0 Changes in Inventories of Finished Goods / Work- in-progress and Stock-In-Trade 0







Note 1: Revenue from OperationsGross Sales 3210000 Less: Returns and allowances (48000) 3162000

Note 2: Cost of Materials ConsumedOpening Inventory 256000 Add: Material Purchase 2425000 Less: Closing Inventory (248000) 2433000

Note 3: Other ExpensesLease Payments 52000 Advertising Expenses 68000 R&D expenditures 35000 Repairs and maintenance costs 22000 177000


Q.No.6

The following data extracted from the books of M/s. DHL Transport Corp. for the year ended March 31, 2012.

Rs. Rs.Sales revenue 137460 Advertising 5790Sales returns 2060 Sales Commission 3470Sales discounts 5190 Office Salaries 18150Purchases 67310 Office Rent 14000Opening Stock 12300 Office Supplies Expense 5330Freight-In 4450 Other Income 1200Purchase Returns 1000 Gain on Sale of Equipment 2430Purchase Discounts 3900 Loss on Sale of Investments 1640Ending Stock 16700 Interest Expense 930Freight-Out 6150 Interest Revenue 430

Tax @ 25%

Instruction: Prepare a Multiple Step Income Statement.

Solution:





IV

Expenses: Cost of Materials Consumed 3 62460 Purchases of Stock-In-Trade 0 Changes in Inventories of Finished Goods / Work- in-progress and Stock-In-Trade 0



VI Exceptional Items 0 VII Profit before Tax (VII-VIII) 16350 VIII Tax Expenses: 0


(1) Current Tax 4088 (2) Deferred Tax




Note 2: Other IncomeOther Income 1200 Gain on Sale of Equipment 2430 Loss on Sale of Investments (1640)Interest Revenue 430 2420

Note 3: Cost of Materials ConsumedOpening Inventory 12300 Add: Material Purchase 67310 Less: Purchase Returns (1000)Add: Freight-In 4450 Less: Purchase Discounts (3900)Less: Closing Inventory (16700) 62460

Note 4: Other ExpensesFreight-Out 6150 Advertising Expenses 5790 Sales Commission 3470 Office Rent 14000 Office Supplies Expense 5330 34740


Preparation of Balance Sheet

Q.No. 1. The following are ledger balances extracted from the Books of M/s. Milton India Ltd for the year ended 31.3.2019

Share Capital 46000 Furniture and Property 20080Long term Borrowing 32500 Goodwill 12000Short term Borrowing 1250 Capital Work-in-Progress 4000Other Long term Liabilities 7500 Long term Loans 25000Reserves and Surplus 22600 Other non-current Assets 14000Trade Payables 17520 Inventories 38000Other current liabilities 35250 Current Investment 3600Long term Provisions 2460 Short term loans 22000Trade receivables 15200 Other current asset 6000Cash and Cash equivalents 5200

Instruction: Prepare a Balance Sheet as per Schedule III.

Part – IName of the Company: M/s. Milton India Ltd.,

Balance Sheet for the year ended: 31 March, 2019 (Rs. In '000)

Particulars Note No.

Figures for the Current

Reporting Period

I. EQUITY AND LIABILITIES (1) Shareholders’ funds

(a) Share capital 46000(b) Reserves and surplus 22600(c) Money received against share warrants

(2) Share application money pending allotment (3) Non-current liabilities

(a) Long term borrowings 32500(b) Deferred tax liabilities (Net) (c) Other Long term liabilities 7500(d) Long term provisions 2460

(4) Current liabilities (a) Short term borrowings 1250(b) Trade payables 17520(c) Other current liabilities 35250(d) Short term provisions

TOTAL 165080II. ASSETS (1) Non-current assets

(a) Fixed assets (i) Tangible assets 20080


(ii) Intangible assets 12000(iii) Capital work-in progress‐ 4000(iv) Intangible assets under development

(b) Non-current investments (c) Deferred tax assets (net) (d) Long term loans and advances 25000(e) Other non-current assets 14000

(2) Current assets (a) Current investments 3600(b) Inventories 38000(c) Trade receivables 15200(d) Cash and cash equivalents 5200(e) Short term loans and advances 22000(f) Other current assets 6000

TOTAL 165080

Q.No. 2. The following are ledger balances extracted from the Books of M/s. Lipton India Ltd for the year ended 31.3.2019

Share Capital 153000 Plant, Machinery and Properties 110000Retained Earning 120000 Good Will 55000Bank Loan 50000 Capital work-in-progress 80000

Other Long term Liabilities 22000Intangible assets under development 20000

Long term provisions 2500 Short term borrowings 22000Trade Payables 10000 Other Current Liabilities 12000Short term provisions 1500 Long term loans 15000Other non-current assets 12000 Current investments 15000Stock 25000 Receivables 33000Cash 12000 Short term loans 12000Other Current Assets 4000


Part – IName of the Company: M/s. Lipton India Ltd.,




Reporting Period


(a) Share capital 153000(b) Reserves and surplus 120000(c) Money received against share warrants


(2) Share application money pending allotment (3) Non-current liabilities

(a) Long term borrowings 50000(b) Deferred tax liabilities (Net) (c) Other Long term liabilities 22000(d) Long term provisions 2500

(4) Current liabilities (a) Short term borrowings 22000(b) Trade payables 10000(c) Other current liabilities 12000(d) Short term provisions 1500


(a) Fixed assets (i) Tangible assets 110000(ii) Intangible assets 55000(iii) Capital work-in progress‐ 80000(iv) Intangible assets under development 20000

(b) Non-current investments (c) Deferred tax assets (net) 0(d) Long term loans and advances 15000(e) Other non-current assets 12000

(2) Current assets (a) Current investments 15000(b) Inventories 25000(c) Trade receivables 33000(d) Cash and cash equivalents 12000(e) Short term loans and advances 12000(f) Other current assets 4000

TOTAL 393000

Q.No. 3. From the following ledger balances of Franklin Company, You are required to prepare a classified Balance Sheet as on March 31,2018

Good Will 3100 Short-term investments 2000Land 10000 Cash 6600Equipment 24000 Owner's Capital 34050Depreciation on Equipment 5000 Mortgage payable 10000Investment in shares 5000 Notes Payable (Long-term) 1300Investment in Bonds 2200 Notes Payable 11000Inventories 5100 Accounts Payable 2100Prepaid Insurance 400 Salaries payable 1600Notes receivable 1000 Interest payable 1350Accounts receivable 7000



Part – IFranklin Company




Reporting Period


(a) Share capital 34050(b) Reserves and surplus (c) Money received against share warrants

(2) Share application money pending allotment (3) Non-current liabilities 1 11300

(a) Long term borrowings (b) Deferred tax liabilities (Net) (c) Other Long term liabilities (d) Long term provisions

(4) Current liabilities 2 16050(a) Short term borrowings (b) Trade payables (c) Other current liabilities (d) Short term provisions

TOTAL 61400II. ASSETS (1) Non-current assets 3 32100

(a) Fixed assets (i) Tangible assets (ii) Intangible assets (iii) Capital work-in progress‐ (iv) Intangible assets under development

(b) Non-current investments 4 7200(c) Deferred tax assets (net) (d) Long term loans and advances (e) Other non-current assets

(2) Current assets (a) Current investments 2000(b) Inventories 5100(c) Trade receivables 8000(d) Cash and cash equivalents 6600(e) Short term loans and advances (f) Other current assets 400

TOTAL 61400


Note 1: Non Current LiabilitiesMortgage Payable 10000Notes Payable (Long-term) 1300 11300

Note 2: Current LiabilitiesNotes Payable 11000Accounts Payable 2100Salaries Payable 1600Interest Payable 1350 16050

Note 3: Non-Current AssetsLand 10000Equipment (Less Depreciation) 19000Goodwill 3100 32100

Note 4: Non-Current InvestmentsInvestment in Shares 5000Investment in Bonds 2200 7200

Q.No. 4. From the following ledger balances of Xpress Transport Corporation, You are required to prepare a classified Balance Sheet as on March 31,2018.

Cash 7000 Notes Payable 21000Short-term investments 12000 Accounts Payable 4600Accounts receivables 8500 Salaries and Wages Payable 5800Notes Receivables 5000 Unearned service revenue 1500Inventory 6500 Interest Payable 750Prepaid Insurance 500 Mortgage Payable 15000Investment in Stocks 5000 Notes Payable (Long term) 4350Investment in Real Estate 4500 Owner's Capital 35000

Land 15000Accumulated Depreciation in equipment

3500

Equipment 25000 Patents 2500Instruction: Prepare a Balance Sheet as per Schedule III.


Part – IXpress Transport Corporation




Reporting Period


(a) Share capital 35000(b) Reserves and surplus (c) Money received against share warrants

(2) Share application money pending allotment (3) Non-current liabilities 1 19350

(a) Long term borrowings (b) Deferred tax liabilities (Net) (c) Other Long term liabilities (d) Long term provisions

(4) Current liabilities 2 33650(a) Short term borrowings (b) Trade payables (c) Other current liabilities (d) Short term provisions


(a) Fixed assets (i) Tangible assets 3 36500(ii) Intangible assets 2500(iii) Capital work-in progress‐ (iv) Intangible assets under development

(b) Non-current investments 4 9500(c) Deferred tax assets (net) (d) Long term loans and advances (e) Other non-current assets

(2) Current assets (a) Current investments 12000(b) Inventories 6500(c) Trade receivables 13500(d) Cash and cash equivalents 7000(e) Short term loans and advances (f) Other current assets 500

TOTAL 88000


Note 1: Non-Current LiabilitiesMortgage Payable 15000Notes Payable (Long-term) 4350 19350

Note 2: Current LiabilitiesNotes Payable 21000Accounts Payable 4600Salaries and Wages Payable 5800Interest Payable 750Unearned Service Revenue 1500 33650

Note 3: Non-Current Assets - Fixed AssetsLand 15000Equipment (Less Depreciation) 21500 36500

Note 4: Non-Current InvestmentsInvestment in Stocks 5000Investment in Real Estate 4500 9500

Q.No. 5. These financial statement items are for Ranbaxy Pharma Co. Ltd., at year-end, March 31, 2018

Notes Payable 15350 Accounts Receivable 29250Accounts Payable 25500 Investment (Short Term) 15000Interest Payables 1500 Prepaid Expenses 1000Loan from Bank 10000 Inventories 50000Loan on Mortgage 20000 Furniture 18000Retained Earnings 10000 Plant and Equipment 20000Capital 143000 Land and Building 40000Cash in hand 1400 Freehold Land 20000Cash at Bank 10700 Good Will 20000



Part – IRanbaxy Pharma Co. Ltd.,




Reporting Period


(a) Share capital 143000(b) Reserves and surplus 10000

(2) Share application money pending allotment (3) Non-current liabilities 1 30000(4) Current liabilities 2 42350


(a) Fixed assets (i) Tangible assets 3 98000(ii) Intangible assets 20000

(2) Current assets 4 107350TOTAL 225350

Note 1: Non-Current LiabilitiesLoan from Bank 10000Loan on Mortgage 20000 30000

Note 2: Current LiabilitiesNotes Payable 15350Accounts Payable 25500Interest Payable 1500 42350

Note 3: Non-Current Assets - Fixed AssetsFurniture 18000Plant and Equipment 20000Land and Building 40000Freehold Land 20000 98000

Note 4: Current AssetsCurrent investments 15000Inventories 50000Trade receivables 29250Cash and cash equivalents 12100


Other current assets 1000 107350

Preparation of Statement of Profit and Loss and Balance Sheet

Q.No 1: Cadila provides you the following trail balance as on 31st March 2017.

Particulars Debit Rs. Credit Rs.Share Capital ( 60000 shares of 10 each) 600,000Property, Plant and Equipment 1,040,000 Salaries and Wages 100,000 Sales 1,460,000Cost of Goods Consumed 760,000 Share application money pending allotment 50,000Creditors 100,000Goodwill 90,000 Debtors 200,000 10% Debenture 100,000General Reserve 50,000Discount & Interest 40,000Other Expenses 80000 Cash 120,000 Interest 10,000

2,400,000 2,400,000Tax @ 30%Required:(a). Prepare a Statement of Profit and Loss(b). Prepare a Balance Sheet as on 31.3.2017

Statement of P&L of Cadila for the year ending 31.3.2017Particulars Note no. Rs.

Income : Revenue from operations 1,460,000Other Income 40,000Total incomes (A) 1,500,000Expenses : Cost of Goods Consumed 760,000Employee benefit expenses 100,000Other Expenses 80,000Depreciation Financial Cost (interest) 10,000Total expenses (B) 950,000Profit before tax (A-B) 550,000Less: Income tax (30%) 165,000Profit after tax 385,000


EPS = Profit after tax/No. of equity shares 6.416667

Balance Sheet of Cadila as on 31-03-2017Particulars Note No. Rs.Equity and Liabilities: (1) Share Holders' funds: (a) Share capital 600,000 (b) Reserves and Surplus 435,000Share application money 50,000(3) Non-Current liabilities: 10% Debentures 100,000(4) Current Liabilities 100,000 Tax Provision 165,000Total Liabilities 1,450,000 Assets: (1) Non-Current Assets: (a) Tangible assets 1,040,000(b) Intangible assets 90000 (2) Current Assets 320,000Total Assets 1,450,000

Q.No 2: The following is the Trial Balance of Clarion Limited as on 31.3.2018Particulars Debit (Rs.) Credit (Rs.)

Share Capital ( 25000 shares of 10 each) 250,000Property, Plant and Equipment 850,000 Salaries and Wages 85,000 Sales Revenue 1,250,000Cost of Goods Consumed 640,000 Share application money pending allotment 25,000Short Term Borrowings 112,000Patents 90,000 Trade Receivables 32,000 Bank Loan for 10 Years 80,000Other Expenses 6,000 Cash 7,500 Reserves and Surplus 20,000Inventories 14,000 Investment in Bonds 2,500 Interest 10,000

1,737,000 1,737,000Tax @ 30%Required:


(a). Prepare a Statement of Profit and Loss(b). Prepare a Balance Sheet as on 31.3.2018

Statement of P&L of Clarion for the year ending 31.3.2018Particulars Note no. Rs.

Income : Revenue from operations 1,250,000Other Income 0Total incomes (A) 1,250,000Expenses : Cost of Goods Consumed 640,000Employee benefit expenses 85,000Financial Cost (interest) 10,000Depreciation 0Other Expenses 6,000Total expenses (B) 741,000Profit before tax (A-B) 509,000Less: Income tax (30%) 152,700Profit after tax 356,300EPS = Profit after tax/No. of equity shares 14.252

Balance Sheet of Clarion for the year ending 31.3.2018Particulars Note No. Rs.Equity and Liabilities: (1) Share Holders' funds: (a) Share capital 250,000 (b) Reserves and Surplus 376,300Share application money 25,000(3) Non-Current liabilities: Bank Loan 80,000(4) Current Liabilities 112,000 Tax Provision 152,700Total Liabilities 996,000 Assets: (1) Non-Current Assets: (a) Tangible assets 850,000(b) Intangible assets 90,000(c) Investment in Bonds 2,500(2) Current Assets Trade Receivables 32,000 Cash 7,500 Inventories 14000


Total Assets 996,000

Q.No 3: The following trial balance relates to Keystone Limited as on 31.3.2018Particulars Debit Rs. Credit Rs.

Revenue 377,600Material Purchases 64,000 Salaries and Wages 124,000 Other Expenses 140,600 Finance Cost 350 Investment Income 800Property 94,500 Accumulated Depreciation on Property 24500Stock 46,700 Trade Receivables 31,150 Trade Payables 27,800Bank Overdraft 2,300Equity Shares (5000 Shares @ Rs.10 each) 50,000Retained Earnings 15600Deferred Tax Liability 2700

501,300 501,300Tax @ 25%Required:(a). Prepare a Statement of Profit and Loss(b). Prepare a Balance Sheet as on 31.3.2018

Statement of P&L of Keystone Limited for the year ending 31.3.2018Particulars Note no. Rs.

Income : Revenue from operations 377,600Other Income 800Total incomes (A) 378,400Expenses : Cost of Goods Consumed 64,000Employee benefit expenses 124,000Financial Cost (interest) 350Other Expenses 140,600Total expenses (B) 328,950Profit before tax (A-B) 49,450Less: Income tax (30%) 14,835Profit after tax 34,615 EPS = Profit after tax/No. of equity shares 1.3846


Balance Sheet of Keystone Limited for the year ending 31.3.2018Particulars Note No. Rs.Equity and Liabilities: (1) Share Holders' funds: (a) Share capital 50,000 (b) Reserves and Surplus 50,215Share application money (3) Non-Current liabilities: Deferred Tax Liability 2,700(4) Current Liabilities Trade Payables 27,800 Bank Overdraft 2,300 Tax Provision 14,835Total Liabilities 147,850 Assets: (1) Non-Current Assets: (a) Tangible assets(94500-24500) 70,000(2) Current Assets (a) Trade Receivables 31,150 (b) Inventories 46,700Total Assets 147,850

Q.No 4: Tech Mahindra Limited is an Indian multinational subsidiary of the Mahindra Group, providing information technology (IT) services and business process outsourcing (BPO) to companies in various vertical and horizontal markets. Anand Mahindra is the Chairman of Tech Mahindra, which is headquartered at Pune and has its registered office in Mumbai. Tech Mahindra provides you the following trail balance as on 31st March 2018.

Particulars Debit Rs. Credit Rs.Share Capital: Authorised 1,00,000 shares of 10 each) 1,000,000Share Capital: Issued 40,000 shares of 10 each) 400,000Bank 80,000 Salaries 180,000 PF Contribution 10,000 Revenue: BFSI Segment 400,000 Telecom Segment 200,000 Manufacturing Segment 400,000Software development expenses 100,000 Government grant for R&D 50,000Creditors 50,000


Printing & Stationery 10,000 Debtors 200,000 General Reserve 50,000Plant and Equipment on 1.4.2017 60,000 Plant and Equipment added on 1.1.2018 10,000 Discount & Interest 40,000P&L Account as on 1.4.2017 130,000Visa Charges 30,000 Land 900,000 Cash 120,000 Audit Fees 20,000

1,720,000 1,720,000

ADJUSTMENTS1. Income tax rate is 30%2. Depreciate Plant & Equipment at 10% p.a.3. Dividend proposed Rs 2 per share4. Dividend Distribution Tax 16%5. Outstanding Salary Rs. 10,0006. Prepaid Audit Fees Rs. 5,000Required:(a). Prepare a Statement of Profit and Loss(b). Prepare a Balance Sheet as on 31.3.2018

Statement of P&L of Tech Mahindra for the year ending 31.3.2018Particulars Note No. Rs.

Sales 1 1,000,000Other Income 2 90,000

Total incomes (A) 1,090,000Expenses : Software development expenses 100,000Employee benefit expenses 3 200,000Other Expenses 4 55,000Depreciation on PPE 5 6,250Total expenses (B) 361,250Profit before tax (A-B) 728,750Less: Income tax (30%) 218,625Profit after tax 510,125 EPS = Profit after tax/No. of equity shares 12.75

Note 1 Revenue from Operations Note 4 Other Expenses


BFSI Segment 400,000 Printing & Stationery 10,000Telecom Segment 200,000 Visa Charges 30,000Manufacturing Segment 400,000 Audit Fees [20,000 - 5,000] 15,000

Total 1,000,000 Total 55,000Note 2 Other Income Note 5 Dep & Amortisation

Govt Grant 50,000 P,P&E Dep [6,000 + 250] 6,250Discount & Interest 40,000 Total 6,250

Total 90,000Note 3 Employee benefit exp

Salaries [1,80,000 + 10,000] 190,000PF contribution 10,000

Total 200,000

Balance Sheet of Tech Mahindra as on 31-03-2018Particulars Note No. Rs.Equity and Liabilities: (1) Share Holders' funds: (a) Share capital 6 400,000 (b) Reserves and Surplus 7 597,325(2) Share Application Money Pending 0(3) Non-Current liabilities 218,625(4) Current Liabilities 8 152,800Total Liabilities 1,368,750 Assets: (1) Non-Current Assets: (a) Tangible assets Less Dep 9 963,750(2) Current Assets 10 405,000Total Assets 1,368,750

Note 6 Share Capital Note 9 Tangible Assets Rs. Plant and Equipment on 1.4.2017 60,000

Authorised 1,000,000 Plant and Equipment added on 1.1.2018 10,000

Issued & Paid up 400,000 Less: Dep -6,250Total 400,000 Land 900,000

Note 7 Reserves & Surplus Total 963,750P&L Account as on 1.4.2017 130,000 Note 10 Current AssetsAdd: Current year profits 510,125 Bank 80,000Add: Gen Reserve 50,000 Debtors 200,000Less: Dividend Payable [2 x 40,000] -80,000 Cash 120,000Less: D D Tax 16% -12,800 Prepaid Audit fees 5,000

Total 597,325 Total 405,000Note 8 Current Liability

O/s Salary 10,000


Income tax (Corporate tax) Dividend Payable 80,000D D Tax 12,800Creditors 50,000

Total 152,800

Q.No 5: Lupin Limited is a multi-national pharmaceutical company based in Mumbai, Maharashtra, India. It is the 12th-largest company by market capitalization, and the eighth-largest generic pharmaceutical company by revenue globally. Lupin Limited provides you the following trail balance as on 31st March 2017.

Particulars Debit Rs. Credit Rs.Share Capital ( 50000 shares of 10 each) 500,000Machinery 100,000 Salaries 50,000 Sales: Generics 400,000 Patented Drugs 700,000 Active Pharma Ingredients 3,60,000Purchases 5,00,000 Share application money pending allotment 50,000Creditors 1,00,000Printing & Stationery 30,000 Dealers commission 60,000 Debtors 2,00,000 10% Debenture 1,00,000General Reserve 50,000Furniture & Fittings 100,000 Stock of finished goods on 1.4.2016 200,000 Discount & Interest 40,000P&L account as on 1.4.2016 1,00,000Wages 50,000 Excise duty 50,000 Debenture interest paid 10,000 Vehicles 9,00,000 Cash 1,20,000 Audit Fees 30,000

24,00,000 24,00,000

ADJUSTMENTS1. Income tax rate is 30%2. Depreciate Vehicles by 5% and Machinery by 10% 3. Stock of finishes goods as on 31.03.2017 Rs 5,00,0004. Dividend proposed Rs 2 per share5. Dividend distribution tax 16%


REQUIRED1. Statement of P/L for the year ending 31.03.20172. Balance sheet as on 31.03.2017

Statement of P&L of Lupin Limited for the year ending 31.3.2017Particulars Note no. Rs.

Income : Revenue from operations 1 1,460,000 Other Income 40,000Total incomes (A) 1,500,000Expenses : Purchases 500,000Change in Stock (Rs.2,00,000 – Rs. 5,00,000) -300,000Employee benefit expenses 2 100,000Depreciation 3 55,000Financial Cost (Debenture interest) 10,000Other Expenses 4 170,000Total expenses (B) 535,000Profit before tax (A-B) 965,000Less: Income tax (30%) 289,500Profit after tax 675,500EPS = Profit after tax/No. of equity shares 13.51

Note 1 Sales (Rs.) Note 3 Depreciation (Rs.) Rs. Rs.

Generics 400,000 On machiery 10,000Patented Drugs 700,000 On vehicles 45,000Active Pharma Ingredients 360,000 Total 55,000

Total 1,460,000Note 4 Other Expenses (Rs.)

Note 2 Employee benefit expenses Excise Duty 50,000 Salaries 50,000 Printing 30,000 Wages 50,000 Audit fees 30,000

Total 100,000 Dealers commission 60,000Total 170,000

Balance Sheet of Lupin Limited as on 31-03-2017Particulars Note No. Rs.Equity and Liabilities: (1) Share Holders' funds: (a) Share capital 500,000


(b) Reserves and Surplus 5 709,500(2) Share application money 50,000(3) Non-Current liabilities: 10% Debentures 100,000(4) Current Liabilities 6 505,500Total Liabilities 1,865,000 Assets: (1) Non-Current Assets: (a) Tangible assets 7 1,045,000(b) Intangible assets 0(2) Current Assets 8 820,000Total Assets 1,865,000

Note 5 Reserves & Surplus (Rs.) Note 7 Tangible assets (Rs.)P&L: Opening 100,000 Machinery less dep 90,000Add: Current year 675,500 Vehicles less dep 855,000Add: General reserve 50,000 Furniture 100,000Less: Dividend proposed (50,000 x 2) -100,000 Total 1,045,000

Less: Dividend distribution tax -16,000Total 709,500 Note 8 Current Assets (Rs.)

Note 6 Current Liabilities (Rs.) Cash 120,000Tax Provision 289,500 Debtors 200,000Creditors 100,000 Closing stock 500,000Dividend proposed 100,000 Total 820,000Dividend distribution tax 16,000

Total 505,500

Q.No 6: The Godrej Group is an Indian conglomerate headquartered in Mumbai, Maharashtra, India, managed and largely owned by the Godrej family. It was founded in 1897, and operates in sectors as diverse as real estate, consumer products, industrial engineering, appliances, furniture, security and agricultural products. Subsidiaries and affiliated companies include Godrej Industries and its subsidiaries Godrej Consumer Products, Godrej Agrovet, and Godrej Properties, as well as the private holding company Godrej & Boyce Mfg. Co. Ltd. Its trial balance as on 31.3.2018 is provided below:

Trial Balance as on 31.03.2018Debit Balances Rs. Credit Balances Rs.

Stock on 1.4.2017 75,000 Equity Capital (Rs.10 Each) 100,000


Purchases 245,000 Purchase returns 10,000 Wages 30,000 Discount 3,000 Carriage 950 Profit and Loss account 15,000 Furniture 17,000 Creditors 17,500 Salaries 7,500 Sales 340,000 Rent 4,000 General Reserve 15,500 Sundry Trade Expenses 7,050 Bills payable 7,000 Debtors 27,500 Plant and Machinery 29,000 Cash at Bank 55,200 Patents 4,800 Bills Receivable 5,000 Total 508,000 Total 508,000

Adjustments:1) Stock as on 31st March 2018 Rs.88,0002) Provide for Corporate Tax at 30%3) Depreciation Plant and Machinery at 15%, Furniture at 10% and Patents at 5%4) On 31st March 2018 outstanding rent amounted to Rs.800 and salaries Rs.9005) The Board recommends payment of a dividend Rs 2 per share, Corporate dividend tax rate is 17%

Required:(a) Statement of Profit and Loss for the year ending 31.3.2018(b) Balance Sheet as on 31.3.2018

Statement of P&L of Godrej Industries for the year ending 31.3.2018Particulars Note No. Rs.

Sales 340,000Other Income 3,000

Total incomes (A) 343,000Expenses : Cost of Goods Consumed 1 222,000Employee benefit expenses 2 38,400Depreciation 3 6,290Other Expenses 4 12,800Total expenses (B) 279,490Profit before tax (A-B) 63,510Less: Income tax (30%) 19,053Profit after tax 44,457 EPS = Profit after tax/No. of equity shares 4.45


Note 1 Cost of Goods Consumed (Rs.) Note 3 Depreciation (Rs.)Opening Stock 75000 Plant and Machinery 4350Purchases 245000 Furniture 1700Less: Purchase returns -10000 Patents 240Less: Closing Stock -88000 Total 6290

Total 222000 Note 4 Other ExpensesNote 2 Employee benefit expenses (Rs.) Carriage 950

Wages 30000 Sundry Trade Expenses 7050Salaries (Add Outstanding’s) 8400 Rent (Add Outstanding’s) 4800

Total 38400 Total 12800

Balance Sheet of Godrej Industries as on 31-03-2018Particulars Note No. Rs.Equity and Liabilities: (1) Share Holders' funds: (a) Share capital 100,000 (b) Reserves and Surplus 5 51,557(3) Non-Current liabilities 0(4) Current Liabilities 6 68,653Total Liabilities 220,210 Assets: (1) Non-Current Assets: (a) Tangible assets Less Dep 7 39,950(b) Intangible assets 8 4,560(2) Current Assets 9 175,700Total Assets 220,210

Note 5 Reserves & Surplus Note 7 Tangible AssetsP&L Account as on 1.4.2017 15,000 Plant and Machinery 24,650Add: Current year’s profits 44,457 Furniture 15,300Add: Gen Reserve 15,500 Total 39,950Less: Dividend Payable [2 x 10,000] -20,000 Note 8 Intangible AssetsLess: D D Tax 17% -3,400 Patents 4,800

Total 51,557 Less: Amortisation -240Note 6 Current Liability Total 4,560

O/s Salary 900 Note 9 Current AssetsO/s Rent 800 Debtors 27,500 Income tax (Corporate tax) 19,053 Cash at Bank 55,200 Dividend Payable 20,000 Stock 88,000 D D Tax 3,400 Bills Receivable 5,000 Creditors 17,500 Total 175,700 Bills payable 7,000


Total 68,653

Q.No 7: TVS Motor Company (T.V.S) is a multinational motorcycle company headquartered at Chennai. It is the third largest motorcycle company in India. The company has an annual sale of 3 million units and an annual capacity of over 4 million vehicles. TVS Motor Company is also the 2nd largest exporter in India with exports to over 60 Countries. It was the first Indian company to deploy a catalytic converter in a 100 cc motorcycle and the first to indigenously produce a four stroke 150cc motorcycle. Its trial balance as on 31.3.2018 is provided below:

Trial Balance as on 31.03.2018Debit Balances Rs. Credit Balances Rs.Land at Cost 100,000 Equity Capital (Rs.10 Each) 150,000 Plant at Cost 400,000 10% Debentures 50,000 Stock of finished goods on 1.4.2017 90,000 Reserve Fund 40,000

Debtors 145,000 P&L Account 70,000 Purchases 170,000 Sales Investments @ 9% on 1.4.2017 100,000 Aerospace 200,000 Operating Expenses 40,000 Automobiles 190,000 Interest on Debentures 5,000 Railways 120,000 Interim Dividend 30,000 Off-Highway 70,000 Patents 100,000 Vehicle Aftermarket 110,000 Marketing Expenses 10,000 Creditors 40,000 Depreciation Provision - Plant 100,000

Discount & Commission Received 50,000

Total 1,190,000 Total 1,190,000

Adjustments:1) Closing Stock of finished goods Rs.80,0002) Outstanding Marketing Expenses Rs.5,0003) Corporate Tax 30%4) Depreciation on Plant and Machinery 10% per annum on original cost5) Amortise patents by 20%6) Directors Proposed Rs.2 per share as dividend


7) Dividend distribution tax at 17.65%

Required:(a) Statement of Profit and Loss for the year ending 31.3.2018(b) Balance Sheet as on 31.3.2018

Statement of P&L of TVS Motor Company for the year ending 31.3.2018Particulars Note No. Rs.

Income : Revenue from operations 1 690,000Other Income 2 59,000Total incomes (A) 749,000Expenses : Purchases 170,000Change in stock (Rs.90,000 – Rs.80,000) 10,000Other Expenses 3 55,000Finance Cost 5,000Depreciation & Amortisation 4 60,000Total expenses (B) 300,000Profit before tax (A-B) 449,000Less: Income tax (30%) 134,700Profit after tax = PAT 314,300 EPS = PAT/No. of equity shares Rs. 20.95/Share

Note 1 Sales (Rs.) Note 3 Other Exp (Rs.)Aerospace 200,000 Operating expenses 40,000Automobiles 190,000 Marketing expenses + O/S 15,000Railways 120,000 Total 55,000Off-Highway 70,000 Note 4 Depreciation & Amortisation Vehicle Aftermarket 110,000 Rs.

Total 690,000 Dep on P&M 40,000Note 2 Other Income Patents amortised 20,000

Discount & Commission 50,000 Total 60,000Int on Investment accrued 9,000

Total 59,000


Balance Sheet of TVS Motor Company as on 31-03-2018Particulars Note No. Rs.Equity and Liabilities: (1) Share Holders' funds: (a) Share capital 150,000 (b) Reserves and Surplus 5 353,710(3) Non-Current liabilities: 10% Debentures 50,000(4) Current Liabilities 6 220,290Total Liabilities 774,000 Assets: (1) Non-Current Assets: (a) Tangible assets 7 360,000(b) Intangible assets = Patents 80,000(c) Investments 100,000(2) Current Assets 8 234,000Total Assets 774,000

Note 5 Reserves & Surplus (Rs.) Note 6 Current Liabilities (Rs.)P&L: Opening 70,000 Tax Provision 134,700

Add: Current year 314,300 Creditors 40,000

Add: General reserve 40,000 Dividend proposed 30,000Less: Interim Dividend -30,000 Dividend distribution tax 10,590Less: Dividend proposed (15,000 x 2) -30,000 O/S Marketing exp 5,000

Less: Dividend distribution tax -10,590 Total 220,290

Total 353,710

Note 7 Tangible assets (Rs.) Note 8 Current Assets (Rs.)

P&M [4,00,000-1,00,000-40,000] 260,000 Int Accrued 9,000

Land 100,000 Debtors 145,000

Total 360,00 Closing stock 80,000


0Total 234,000

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