Company Final Accounts – Unit 1 – Corporate Accounting

Problem.No.1
Moon and star Co. Ltd. Is a company with an authorised capital of Rs.5,00,000 divided into 5,000 equity shares of
Rs.100 each on 31.12.2013 of which 2,500 shares were fully called up. The following are the balances extracted from
the ledger as on 31.12.2013.
Trial balance of Moon and star Co. Ltd.
Debit Rs. Credit Rs.
Opening stock 50,000 Sales 3,25,000
Purchases 2,00,000 Discount received 3,150
Wages 70,000 Profit & loss A/c 6,220
Discount allowed 4,,200 Creditors 35,200
Insurance (upto 30.6.2013) 6,720 Reserves 25,000
Salaries 18,500 Loan from managing director 15,700
Rent 6,000 Share capital 2,50,000
General expenses 8,950
Printing 2,400
Advertisements 3,800
Bonus 10,500
Debtors 38,700
Plant 1,80,500
Furniture 17,100
Bank 34,700
Bad debts 3,200
Calls-in-arrears 5,000

6,60,270 6,60,270

You are required to prepare Statement of Profit & Loss for the year ended 31.12.2013 and a balance sheet as on that date.
The following further information is given:
(a) Closing stock was valued at Rs. 1,91,500
(b) Depreciation on plant at 15% and on furniture at 10% should be provided.
(c) A tax provision of Rs. 8,000 is considered necessary.

Problem No.2
The authorised capital of X limited is Rs.5,00,000 consisting of 2,000 6% preference shares of Rs.100 each and 30,000
equity shares of Rs.10 each. Following was the Trial Balance of X limited as on 31-3-2014:
Trial Balance as on 31-3-2014
Particulars Dr. (Rs.) Cr. (Rs.)
Investment in Shares at cost 50,000
Purchases 4,90,500
Selling Expenses 79,100
Stock on 1-4-2013 1,45,200
Salaries and wages 68,500
Cash on Hand 12,000
Interim preference dividend for the half year to 30-9-2013 6,000
Bills Receivable 41,500
Interest on Bank Overdraft 7,800
Interest on Debentures upto 30-09-2013 3,750
Sundry Debtors and Creditors 50,100 87,850
Freehold property at cost 4,86,500
Furniture at cost less Depreciation of Rs.15,000 35,000
6% Preference Share capital 2,00,000
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Dr.Abdul Hameed, PPFA, BBA LLB Semester I
 Equity Share capital fully paid up 2,00,000
5% Mortgage Debentures secured on freehold properties 1,50,000
Income Tax paid in advance for 2013-14 10,000
Dividends 4,250
Surplus A/c (1-4-2013) 28,500
Sales (Net) 6,70,350
Bank Overdraft secured by hypothecation of Stocks and receivables 1,50,000
Audit fees 5,000
Total 14,90,950 14,90,950
You are required to prepare the Statement of Profit and Loss for the year ended 31-3-2014 and the Balance Sheet as on
that date after taking into account the following:
a) Closing stock was valued at Rs.1,42,500
b) Purchases include Rs.5,000 worth of goods and articles distributed among valued customers.
c) Salaries and wages include Rs.2,000 being wages incurred for installation of electrical fittings which were
recorded under “Furniture”.
d) Bills receivable include Rs.1,500 being dishonoured bills, 50% of which had been considered irrecoverable.
e) Bills receivable of Rs.2,000 maturing after 31-3-2014 were discounted.
f) Depreciation on furniture is to be charged at 10% on written down value.
g) Interest on debentures for the half year ending on 31-3-2014 was due on that date.
h) Provide provision for taxation Rs.4,000.
i) Salaries and wages include Rs.10,000 being the Directors’ remuneration.
j) Sundry Debtors include Rs.6,000 Debts due for more than six months.
k) Corporate Dividend Tax is to be ignored.

Problem No.3
The authorised capital of Inter State Distributors Ltd. Is Rs.7,50,000 consisting of 3,000 6% cumulative preference
shares of Rs.100 each and 45,000 equity shares of Rs.100 each. Following is the trial balance drawn up on March 31,
2014:
Particulars Amount (Rs.) Particulars Amount (Rs.)
Paid-up Capital: General expenses 21,000
3,000 6% cumulative preference 3,00,000 Furniture at cost 75,000
shares
3,000 equity shares (Rs.75 per 2,25,000 Sales 9,18,600
share called up)
Goodwill 1,00,000 Purchases 4,76,500
5% first mortgage debentures 2,10,000 Bills receivable 6,000
(secured on freehold properties)
Trade debtors 1,67,500 Freight and carriage inward 3,750
Trade creditors 1,25,520 Investments:
Freehold properties at cost 3,90,000 600 shares of Rs.100 each in 60,000
Sunrise limited
Stock on 1st April 2013 2,41,500 Debenture interest (half year 5,250
to September 2013)
General Reserve 82,725 Final dividend for 2012-2013 20,250
Salaries 1,03,500 Preference dividend (half 9,000
year to 30th September 2013)
Surplus A/c (Cr.) 58,500 Balance at bank in current 97,500
account
Reserve for Taxation 8,800 Cash in hand 14,145
Delivery expenses 1,02,000 Shares forfeited account 2,000
Rent and rates 38,250
Adjustments:
a) The value of stock on March 31, 2014 was Rs.2,15,000
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Dr.Abdul Hameed, PPFA, BBA LLB Semester I
 b) Depreciation on freehold properties is to be provided at 2.5% and on furniture at 6%.
c) The directors propose to pay the second half-year’s dividend on preference shares and a 10% dividend on equity
shares.
d) Shares were forfeited on non-payment of Rs.35 per share.
e) Corporate dividend tax need not be provided.
You are required to prepare final accounts of the company.

Problem.No.4
A ltd. Was registered with an authorised capital of Rs.6,00,000 in equity shares of Rs.10 each. The following is its Trial
balance on 31st March 2014.
Trial balance of ‘A’Ltd
Debit Credit balances
balances Rs. Rs.
Goodwill 25,000 --
Cash 750 --
Bank 39,900 --
Purchases 1,85,000 --
Preliminary expenses 5,000 --
Share capital -- 4,00,000
12% debentures -- 3,00,000
P & L A/c (cr) -- 26,250
Calls in arrears 7,500 --
Premises 3,00,000 --
Plant & machinery 3,30,000 --
Interim dividend 39,250 --
Sales -- 4,15,000
Stock(1.4.13) 75,000 --
Furniture & fixtures 7,200 --
Sundry debtors 87,000 --
Wages 84,865 --
General expenses 6,835 --
Freight & carriage 13,115 --
Salaries 14,500 --
Directors fees 5,725 --
Bad debts 2,110 -
Debenture interest paid 18,000 ---
Bills payable -- 37,000
Sundry creditors -- 40,000
General reserve -- 25,000
Provision for bad debts -- 3,500

12,46,750 12,46,750

Statement of Profit & Loss and Balance Sheet in proper form after making the following adjustments:
1. Depreciate plant and machinery by 15%
2. Write off preliminary expenses
3. Provide for 6.months interest on debentures
4.Leave bad and doubtful debts provision at 5% on sundry debtors.
5.Provide for income tax at 50%.
6.Stock on 31.3.2014 was Rs.95,000.
7.Provide for corporate dividend tax @ 17% .

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Dr.Abdul Hameed, PPFA, BBA LLB Semester I
Problem.No.5
The Mafatlal manufacturing company ltd. Chennai was registered with a nominal capital Rs.12,00,000 in equity shares
of Rs.10 each. The following is the list of balances extracted from its books on 31st March 2015.
Debit Rs. Credit Rs.
Premises 6,00,000 Sales 8,30,000
Stock (1.4.14) 1,50,000 6% debentures 6,00,000
Furniture 14,400 Profit and loss A/c (Cr.) 29,000
Calls-in-arrears 15,000 Bills payable 76,000
Plant & machinery 6,60,000 Sundry creditors 1,00,000
Interim dividend 75,000 General reserve 50,000
Sundry debtors 1,74,000 Provision for doubtful debts 7,000
Goodwill 68,000 (1.4.14) 8,00,000
Cash and bank balances 63,300 Subscribed, called up & paid up
Purchases 3,70,000 capital
Preliminary expenses 10,000
Wages 1,69,730
General expenses 13,670
Advertising 20,000
Freight 26,230
Salaries 29,000
Directors’ fees 11,450
Bad debts 4,220
Debenture interest paid 18,000
24,92,000 24,92,000
The following adjustments have to be made:
i. Stock on 31st March 2015 was valued at Rs. 1,90,000
ii. Write off preliminary expenses
iii. Provide for half year's debenture interest.
iv.The provision for doubtful debts on 31st March 2015 should be equal to 1% on sales.
v.Directors' fees are outstanding to the extent of Rs. 550 and salaries Rs. 1,000..
vi. Depreciate Plant & Machinery by 5%; premises by 2% and write off Rs. 2,400 on furniture.
You are required to prepare the Statement of Profit & -Loss. for the year ended '31st March 2015 and the-Balance Sheet as on
the same- date.

Problem.No.6
Following is the trial balance of X Ltd as at 31st March 2013:
Stock, 31st March 2012 75,000
Sales 3,50,000
Purchases 2,45,000
Wages 50,000
Discount 5,000
Furniture and Fittings 17,000
Salaries 7,500
Rent 4,950
Sundry expenses 7,050
Surplus Account 31st March 2012 15,030
Dividend paid 9,000
Share Capital 1,00,000
Debtors and Creditors 37,500 17,500
Plant &Machinery 29,000
Cash and Bank 16,200
Reserve 15,500
Patents & Trade Mark 4,830
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Dr.Abdul Hameed, PPFA, BBA LLB Semester I
 5,03,030 5,03,030
Prepare statement of Profit and Loss for the year ended 31st March, 2013 and Balance sheet as at that date. Take
into consideration the following adjustments:
Stock on 31stMarch, 2013 was valued at Rs.82,000; Depreciation on fixed assets @ 10%.Make a provision for
income tax @ 50%;Ignore corporate dividend tax.

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Dr.Abdul Hameed, PPFA, BBA LLB Semester I