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Vertical statement

VERTICAL BALANCE SHEET OF Anisha LTD. AS ON 31ST MARCH 2008


Rs. Rs. Rs.
I) SOURCES OF FUNDS
A) Funds/ Proprietors/ Owners Own/ Owned! Net worth Equity
Share Capital:
Equity Share Capital 10

Preference Share Capital 5 15


Add : Reserves & Surplus
Capital Reserve 2
Dividend Equalisation Reserve 1
Securities Premium A/c 2
General Reserve 1
Profit & Loss A/c 1 7
22
Less: Ficticious Assets 1
Profit & Loss A/c (Dr. Balance i.e. Asset Side) 0
Preliminary Expenses 1
Discount on issue of shares 1 2 20

B) Borrowed Funds/ Loan Funds/ Owed Funds


i) Secured Loans:
Debentures 2
Bank Loan 3 5
ii) Unsecured Loans:
Public Deposits 3
Loan from relative / director 2 5 10
Total Capital Employed 30

II) APPLICATION OF FUNDS Rs. Rs. Rs.

A) FIXED ASSETS
Goodwill 3
Patent 2
Land 3
Furniture 10
Less : Depreciation -3 7 15

B) INVESTMENTS
Trade Investments 2
G. P. Notes (Government notes) 3

C) WORKING CAPITAL
CURRENT ASSETS
Stock 10
Debtors 15
Cash 3
Short Term Investments / Marketable Investments 5
Prepaid Expenses 2 35

Less: CURRENT LIABILITIES


Creditors 15
Short Term Loan/ Bank Overdraft 5
Provision for Tax 2
Proposed Dividend 2
Outstanding Expenses 1 -25 10
Total Capital Utilised 30
1
Quick Assest: Current Assets - Stock – Prepayments

Quick Liabilities: Current liabilities - Bank Overdraft - Advance receipts

Fixed Liabilities = Borrowed Funds = Owed Funds

Vertical Revenue Statement for JMD Ltd. for the year ended 31st March, 2008
Particulars Rs. Rs. Rs.
Gross Sales:
Cash Sales 100
Credit Sales 200 300
Less : Returns (10)
Net Sales 290
Less : Cost of Goods Sold
Opening Stock 20
Add: Purchases 110
Less: Returns (10) 100
120
Less : Closing Stock (10)
110
Add: Factory Expenses:
Wages 50
Power and Fuel/ Depreciation on Plant 20 70 (180)
Gross Profit 110
Add Operating Income
Bad Debts Recovery 10
Miscellaneous Income 10 20
130
Less: Operating Expenses
A) Administrative Expenses:
Depreciation on Office Equipments 10
All Office Expenses 30 40

B) Selling & Distribution Expenses:


Showroom Expenses 10
Depreciation on Delivery Van 10 20

C) Finance Expenses:
Bank Charges/ Interest paid on loans 10 (70)
Net Operating Profit 60
Add: Non - Operating Income
Profit on sale of plant 5
Interest on Investments received 10
Dividend Income received 10 25
85
Less: Non – Operating Expenses
Loss on sale of plant 10
Provision for claim for damages 5 (15)
Net Profit Before Tax (NPBT) 70
Less Tax (35)
Net Profit After (NPAT) 35
Add: P & L balance b/f 100
135
Less: Appropriations
Dividends 30
Transfer to General Reserve 30 (60)
Profit & Loss balance c/d/Retained Earnings 75

BALANCE SHEET ITEMS


Share Capital: Fixed Assets
Equity Share Capital Net Block (WDV)
10% Preference Share Capital Goodwill
2
Patents
Reserves and Surplus Copyrights/ Trademarks
Securities/ Share Premium Advance for Purchase of Mach
General Reserve Land & Bldg
Profit & Loss A/c. Plant & Mach
P & L Appropriation A/c. Furniture
Capital Reserve Loose Tools
Dividend Equalisation Reserve Capital WIP
Note: Accumulated Depreciation / Provision for
Fictitious Assets Depreciation is to be deducted from Fixed Assets
Preliminary Expenses (also called as Gross Block)
Discount on issue of shares
or Debentures Current Assets
Profit & Loss Dr. bal. - Asset side Customer/ Debtors/ Book Debts/ Accounts Receivable
Underwriting Commission Stock/ Inventories: Raw Material, WIP, Finished Goods, and
Stores.
Current Liabilities Cash in hand, Cash at Bank
Creditors/ Suppliers/ Accounts Payable Prepaid Exp/ Exp. Paid in Advance
Bank Overdraft Short term Investments /Marketable Investments/
Provision for Taxation Current Investments/ Liquid Investments
Outstanding/ Accrued Expenses Bills Received/ Acceptances Received
Proposed dividend Advance Tax
Bills Payable/ Acceptances given Deposits given
Unpaid Taxes Fixed Deposits with Bank
Unclaimed Dividend Income Receivable on Investments
Creditors for Goods/ Expenses/ Miscellaneous Current Assets
Payables
Fixed Deposit payable in one year Secured Loans
Pension/ Gratuity/ Provident Fund 6% Debentures
Provision for Doubtful Debts Bank Loan
Provision for Discount on Debtors Term Loan
Income received in Advance Mortgage Loan
Unsecured Loans
Public Deposits
Loan from Relative/ Friend
Loan from Director

REVENUE ITEMS:
Administrative Expenses Finance Expenses
Salaries Interest paid on Debentures
Electricity Interest paid on Loans/Bank OD
General Expenses Bank Charges
Depreciation Bill Discounting Charges
Dep. on Furniture Discount allowed
Directors Fees Bad Debts/ Provision for Doubtful Debts
Legal Charges
Rent Non Operating Incomes
Printing arid Stationary Profit on sale of asset
Insurance Dividend/ Int. received
Postage Rent from Asset let out
Rates and Taxes
Audit Fees Non Operating Expenses
Telephone Expenses Loss on sale of asset
Miscellaneous/ Sundry Exp Fictitious asset W/olf
Loss by fire/ theft
Selling and Distribution Provision For claim for damages
Sales Salaries
Advertising Operating Incomes
Dep. on delivery Van Bad Debts Recovery
Showroom Expenses Miscellaneous Income.
Delivery Expenses/ Carriage Outward Royalty Received
Exhibition/ Trade Fair Exp.
Royalty on Sales
Salesman Traveling
3
Illustration 1
The following is the balance sheet of Tata Ltd., for the year ended 31st March 2009.
Balance Sheet as at March 31, 2008
Liabilities Rs. Assets Rs.
Share capital 6,50,000 Goodwill 25,000
Capital Reserve 2,500 Land 1,29,000
General Reserve 1,20,410 Premises 1,50,000
Contingency Reserve 42,500 Plant 2,34,395
Profit and loss a/c 18,777 Furniture 8,575
5% debenture 1,57,500 3% G.P. notes 71,400
Sundry Creditors 73,900 Stock 1,96,770
Proposed Dividend 75,000 Debtors 2,03,942
Provision for tax 25,000 Cash and bank 1,21,280
Advance tax 23,675
Preliminary expenses 1,550

Total Rs 11,65,587 Total Rs 11,65,587

Rearrange the above balance sheet in to vertical format and calculate the following (a) Current
asset (b) quick assets (c) Intangible asset (d) Fictitious asset (e) fixed assets (f) proprietors fund
( h) working capital (i) Total funds employed (j) Secured loan

Illustration 2

The following is the balance sheet and the profit and loss account of Reliance Ltd., for the year
ended 31st March 2009.
Balance Sheet as at March 31, 2009 (in thousands)
Liabilities Rs. Assets Rs.
Equity Share Capital 500 Trade Investments 200
Dividend Equalisation 70 Patents 30
General Reserve 110 Land and Building (at cost) 320
Profit and Loas A/c 190 Plant and Machinery (at cost) 650
6% Debentures 250 Cash at Bank 88
Bank Overdraft 150 Stock:
Staff Provident Fund 80 Materials 90
Creditors 210 Finished Goods 160
Unpaid Dividend 10 Work-in-progress 60 310
Proposed Dividend 60 Sundry Debtors 230
Provision for Taxation 170 Less : Reserve for Doubtful Debts 8 222
Provision for Depreciation 250 Bills Receivable 30
on plant and Machinery Staff Provident Fund 80
Investments
Deposits with Customs 30
Authorities
4
Advance for purchase of 60
Machinery
Preliminary Expenses 30

2,050 Total Rs. 2,050


Total Rs.
Q.3) Convert the following revenue accounts of TATA LTD. into suitable form for analysis.
Particulars Rs. Particulars Rs.
To Opening Stock 75,000 By Sales
To Purchases 2,20,000 Cash 1,00,000
To Wages 40,000 Credit 3,25000
To Factory Overheads 20,000 4,25,000
To Salaries: Factory 8,000 Less: Returns 5,000 4,20,000
Office 7,000 By Closing Stock 1,30,000
Sales 6,000 By Interest on Investment 5,000
To Electricity: Factory 1,000 By Profit on sale of Assets 18,000
Office 1,000 By Royalty 2,000
To Audit Fees 4,000
To Discount 3,000
To bad debts 7,000
To Advertising 6,000
To Showroom expense 4,000
To Delivery Expenses 5,000
To Depreciation
Plant 10,000
Office Furniture 5,000
Delivery van 15,000
To Loss on sale of van 5,000
To Debenture Interest 10,000
To Directors Fees 12,000
To Legal Charges 6,000
To Rates and Taxes 1,000
To Traveling Expenses. 2,000
To Provision for tax 40,000
To Net Profit c/d 62,000
5,75,000 5,75,000

Q.4) Present the foil. P & L and Balance of Shahrukh ltd. in Vertical Form:
Particulars Rs. Particulars Rs.
To Opening Stock. 20,000 By Sales 1,80,000
To Purchases 1,09,000 Less: Returns 10,000 1,70,000
To Wages 3,000 By closing stock 30,000
To Gross Profit 68,000
Total Rs 2,00,000 Total Rs 2,00,000
To Salaries 16,000 By Gross Profit b/d 68,000
To Rent, Rates, Taxes 8,000 By Profit on Sale of Plant 2,000
To Printing 1,000
To Postage 1,000
To Misc, Expenses 4,000
To Advertisement 2,000
To Office Expenses 4,000
To Interest 3,000
To Loss on Sale of Assets 1,000
To Provision for taxation 15,000
To Net Profit 15,000
Total Rs. 70,000 Total Rs. 70,000
To General Reserve 10,000 By Balance b/d. 2,000
To Dividend 6,000 By Net Profit 15,000
To Balance c/d. 1,000
Total Rs. 17,000 Total Rs. 17,000

5
Home work section:

Vertical Balance sheet

Q.1) Following is the Balance sheet of Harvard Ltd. as on 31st March 2008. Prepare vertical balance sheet
Liabilities Rs. Assets Rs.
Share capital 1,50,000 Goodwill 20,000
Share Premium Account 5,000 Land and Building 80,000
General Reserve 60,000 Plant (at cost less dep.) 44,000
Profit and Loss account 17,000 Furniture (at cost less dep.) 3,000
6% Debenture 50,000 Investment (Trade) 80,000
Bank Loan (Long Term) 35,000 Debtors 70,000
Bank Overdraft 20,000 Stock 60,000
Sundry Creditors 60,000 Cash at Bank 40,000
Provision for Taxation 10,000 Prepaid expenses 5,000
Preliminary expenses 5,000
Total Rs. 4,07,000 Total Rs. 4,07,000

Q2) The following is the balance sheet of Reliance Ltd. as at 31.3.2008 Prepare a vertical balance sheet
Liabilities Rs. Assets Rs.
Preference Share Capital 36,000 Land 25,000
Ordinary Share Capital 87,000 Plant & Machinery 3,01,000
Share Premium 40,000 Vehicles 58,000
General Reserve 40,000 Investments (Pension Funds) 3,000
Profit & Loss Account 20,000 Debtors 21,000
Depreciation Reserve: Stock 42,000
Plant & Machinery 1,82,000 Bills Receivable 26,000
Vehicles 24,000 Prepaid Expenses 2,000
Long-term Loans 6,000 Bank 7,000
Bank Overdraft 10,000 Cash 1,000
Creditors 15,000 Preliminary Expenses 6,000
Unpaid taxes 38,000 Capital work-in-progress 10,000
Dividends (unclaimed) 3,000 Underwriting Commission 3,000
Dividends (unpaid) 1,000
Pension Fund 3,000
Total Rs. 5,05,000 Total Rs. 5,05,000

Vertical Profit and loss account

7Illustration 3

Profit & Loss Account for the year ending March 31, 2002
Particulars Rs. Particulars Rs.
To opening Stock By Sales 2,000
Materials 90 By Stock
Finished Goods 120 Material 90
Work in Progress 40 250 Finished Goods 160
To Purchase of Material 850 Work in Progress 60 310
To Wages 280 By Dividend of Investment 30
To Power 40 By Sale of Scrap 8
To Factory Expenses 110
To Office Salaries 80
To Misc. Expenses 90
To Selling Expenses 120
To Advertisements 80
6
To Preliminary 5
Expenses w/off
To Debenture Interest 15
To Depreciation:
Plant 60
Factory Building 12 72
To Provision for
Taxation 170
To Proposed Dividend 60
To Balance of Profit 126
Total Rs. 2,348 Total Rs. 2,348
Illustration .4:
The following is the profit and loss account of Hot-Shot Ltd., for the year ended 31st March 2002.

Particulars Rs. Particulars Rs.


To Opening Stock 50,000 By Sales
To Purchases 1,10,000 Cash 33,000
To Wages 30,000 Credit 1,72,000
To Factory Expenses 20,000 2,05,000
To Office Salaries 4,000 Less : Returns 5,000 2,00,000
To Office Rent 2,400 By Closing Stock 80,000
To Postage and 500 By Dividend on Investments 1,000
Telegram By Profit on Sale of Plant 2,000
To Directors’ Free 600
To Salesmen’s Salaries 2,000
To Advertising 1,000
To Delivery Expenses 2,000
To Debenture Interest 2,000
To Depreciation:
Office Furniture 1,000
Plant 3,000
Delivery van 2,000
To Loss on Sale of Car 500
To Income-Tax 17,500
To Net Profit 14,500

Total Rs.
2,63,000 Total Rs.
2,63,000
You are required to prepare vertical income statement from the above so as to facilitate the
income statements analysis.