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

Solution

Part – II
Name of the Company: ………………
Profit and Loss Statement for the year ended:……… (` in ……..)
Note Amount
Particulars Note No.
No. (Rs.)
I Revenue from Operations 2605
II Other Income 40
III Total Revenue (I+II) 2645
Expenses:
Cost of Materials Consumed 1000
Purchases of Stock-In-Trade 0
Changes in Inventories of Finished Goods / Work- in-progress
(275)
and Stock-In-Trade
IV
Employee Benefits Expense 850
Finance Costs 20
Depreciation and Amortization Expense 150
Other Expenses 100
Total Expenses 1845
Profit before Exceptional & Extraordinary Items and Tax (III –
V 800
IV)
VI Exceptional Items 0
VII Profit before Tax (VII-VIII) 800
Tax Expenses: (240)
VIII (1) Current Tax
(2) Deferred Tax
IX Profit / (Loss) for the period 560
X Earnings per Equity Share:
FRSA Module 3 – Problems and Solutions

(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 4855
Cost 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

Part – II
Name of the Company: ………………
Profit and Loss Statement for the year ended:……… (` in ……..)
Note
Particulars Note No. Amount (Rs.)
No.
I Revenue from Operations 4855
II Other Income 225
III Total Revenue (I+II) 5080
Expenses:
Cost of Materials Consumed 2500
Purchases of Stock-In-Trade 350
Changes in Inventories of Finished Goods / Work-
(300)
in-progress and Stock-In-Trade
IV
Employee Benefits Expense 550
Finance Costs 50
Depreciation and Amortization Expense 125
Other Expenses 120
Total Expenses 3395
Profit before Exceptional & Extraordinary Items
V 1685
and Tax (III – IV)
VI Exceptional Items 0
VII Profit before Tax (VII-VIII) 1685
Tax Expenses: 421
VIII
(1) Current Tax
 FRSA Module 3 – Problems and Solutions

(2) Deferred Tax

IX Profit / (Loss) for the period 1264
Earnings per Equity Share:
X (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 8000

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

Solution:

Part – II
Name of the Company: ………………
Profit and Loss Statement for the year ended:……… (` in ……..)
Note
Particulars Note No. Amount (Rs.)
No.
I Revenue from Operations 1 460000
II Other Income 2 3600
III Total Revenue (I+II) 463600
Expenses:
Cost of Materials Consumed 316000
Purchases of Stock-In-Trade 0
Changes in Inventories of Finished Goods / Work-
0
in-progress and Stock-In-Trade
IV
Employee Benefits Expense 64000
Finance Costs 2000
Depreciation and Amortization Expense 8000
Other Expenses 3 42000
Total Expenses 432000
Profit before Exceptional & Extraordinary Items
V 31600
and Tax (III – IV)
VI Exceptional Items 0
VII Profit before Tax (VII-VIII) 31600
VIII Tax Expenses: 7900
 FRSA Module 3 – Problems and Solutions

(1) Current Tax

(2) Deferred Tax
IX Profit / (Loss) for the period 23700
Earnings per Equity Share:
X (1) Basic
(2) Diluted

Note 1: Revenue from Operations

Sales Revenue 480000
Less: Sales Returns (12000)
Less: Sales Discounts (8000)
460000

Note 2: Other Income

Interest Revenue 3000
Gain on disposal of Plant 600

3600

Note 3: Other Expenses

Utilities Expenses 17000
Advertising Expenses 16000
Freight 7000
Insurance 2000
42000
 FRSA Module 3 – Problems and Solutions

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 9000

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

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

Note
Particulars Note No. Amount (Rs.)
No.
I Revenue from Operations 1 525100
II Other Income 2 3000
III Total Revenue (I+II) 528100
Expenses:
Cost of Materials Consumed 363400
Purchases of Stock-In-Trade 0
Changes in Inventories of Finished Goods / Work-
0
in-progress and Stock-In-Trade
IV
Employee Benefits Expense 56000
Finance Costs 3600
Depreciation and Amortization Expense 9000
Other Expenses 3 66100
Total Expenses 498100
Profit before Exceptional & Extraordinary Items
V 30000
and Tax (III – IV)
VI Exceptional Items 0
VII Profit before Tax (VII-VIII) 30000
 FRSA Module 3 – Problems and Solutions

Tax Expenses: 1000

VIII (1) Current Tax
(2) Deferred Tax
IX Profit / (Loss) for the period 29000
Earnings per Equity Share:
X (1) Basic
(2) Diluted

Note 1: Revenue from Operations

Sales Revenue 536800
Less: Sales Returns (6700)
Less: Sales Discounts (5000)
525100

Note 2: Other Income

Interest Revenue 2500
Gain on disposal of Plant 500

3000

Note 3: Other Expenses

Utilities 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

2,425,00
Beginning inventory 256,000 Materials purchases
0
Depreciation 78,000 R&D expenditures 35,000
Ending inventory 248,000 Repairs and maintenance costs 22,000
3,210,00
Gross Sales Returns and allowances 48,000
0
Interest expense 64,000 Taxes 51,000
Lease payments 52,000

Solution:
 FRSA Module 3 – Problems and Solutions

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

Note
Particulars Note No. Amount (Rs.)
No.
I Revenue from Operations 1 3162000
II Other Income 0
III Total Revenue (I+II) 3162000
Expenses:
Cost of Materials Consumed 2 2433000
Purchases of Stock-In-Trade 2 0
Changes in Inventories of Finished Goods / Work-
0
in-progress and Stock-In-Trade
IV
Employee Benefits Expense 240000
Finance Costs 64000
Depreciation and Amortization Expense 78000
Other Expenses 3 177000
Total Expenses 2992000
Profit before Exceptional & Extraordinary Items
V 170000
and Tax (III – IV)
VI Exceptional Items 0
VII Profit before Tax (VII-VIII) 170000
Tax Expenses: 51000
VIII (1) Current Tax
(2) Deferred Tax
IX Profit / (Loss) for the period 119000
Earnings per Equity Share:
X (1) Basic
(2) Diluted

Note 1: Revenue from Operations

Gross Sales 3210000
Less: Returns and allowances (48000)

3162000

Note 2: Cost of Materials Consumed

Opening Inventory 256000
Add: Material Purchase 2425000
Less: Closing Inventory (248000)
2433000

Note 3: Other Expenses

 FRSA Module 3 – Problems and Solutions

Lease 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 5790
Sales returns 2060 Sales Commission 3470
Sales discounts 5190 Office Salaries 18150
Purchases 67310 Office Rent 14000
Opening Stock 12300 Office Supplies Expense 5330
Freight-In 4450 Other Income 1200
Purchase Returns 1000 Gain on Sale of Equipment 2430
Purchase Discounts 3900 Loss on Sale of Investments 1640
Ending Stock 16700 Interest Expense 930
Freight-Out 6150 Interest Revenue 430
Tax @ 25%

Instruction: Prepare a Multiple Step Income Statement.

Solution:

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

Note
Particulars Note No. Amount (Rs.)
No.
I Revenue from Operations 1 130210
II Other Income 2 2420
III Total Revenue (I+II) 132630
Expenses:
IV Cost of Materials Consumed 3 62460
Purchases of Stock-In-Trade 0
 FRSA Module 3 – Problems and Solutions

Changes in Inventories of Finished Goods / Work-

0
in-progress and Stock-In-Trade
Employee Benefits Expense 18150
Finance Costs 930
Depreciation and Amortization Expense 0
Other Expenses 4 34740
Total Expenses 116280
Profit before Exceptional & Extraordinary Items
V 16350
and Tax (III – IV)
VI Exceptional Items 0
VII Profit before Tax (VII-VIII) 16350
Tax Expenses: 0
VIII (1) Current Tax 4088
(2) Deferred Tax
IX Profit / (Loss) for the period 12263
Earnings per Equity Share:
X (1) Basic
(2) Diluted

Note 1: Revenue from Operations

Sales Revenue 137460
Less: Sales Returns (2060)
Less: Sales Discounts (5190)
130210

Note 2: Other Income

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

Note 3: Cost of Materials Consumed

Opening 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 Expenses

Freight-Out 6150
 FRSA Module 3 – Problems and Solutions

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 20080

Long term Borrowing 32500 Goodwill 12000
Short term Borrowing 1250 Capital Work-in-Progress 4000
Other Long term Liabilities 7500 Long term Loans 25000
Reserves and Surplus 22600 Other non-current Assets 14000
Trade Payables 17520 Inventories 38000
Other current liabilities 35250 Current Investment 3600
Long term Provisions 2460 Short term loans 22000
Trade receivables 15200 Other current asset 6000
Cash and Cash equivalents 5200
Instruction: Prepare a Balance Sheet as per Schedule III.

Part – I
Name of the Company: M/s. Milton India Ltd.,
Balance Sheet for the year ended: 31 March, 2019 (Rs. In '000)
Figures for the
Note Current
Particulars
No. Reporting
Period
I. EQUITY AND LIABILITIES
(1) Shareholders’ funds
(a) Share capital 46000
(b) Reserves and surplus 22600
 FRSA Module 3 – Problems and Solutions

(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 165080
II. 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 110000

Retained Earning 120000 Good Will 55000
Bank Loan 50000 Capital work-in-progress 80000
Intangible assets under
Other Long term Liabilities 22000 development 20000
Long term provisions 2500 Short term borrowings 22000
 FRSA Module 3 – Problems and Solutions

Trade Payables 10000 Other Current Liabilities 12000

Short term provisions 1500 Long term loans 15000
Other non-current assets 12000 Current investments 15000
Stock 25000 Receivables 33000
Cash 12000 Short term loans 12000
Other Current Assets 4000
Instruction: Prepare a Balance Sheet as per Schedule III.

Part – I
Name of the Company: M/s. Lipton India Ltd.,
Balance Sheet for the year ended: 31 March, 2019 (Rs. In '000)
Figures for the
Note Current
Particulars
No. Reporting
Period
I. EQUITY AND LIABILITIES
(1) Shareholders’ funds
(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
TOTAL 393000
II. ASSETS
(1) Non-current assets
(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
 FRSA Module 3 – Problems and Solutions

(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 2000

Land 10000 Cash 6600
Equipment 24000 Owner's Capital 34050
Depreciation on Equipment 5000 Mortgage payable 10000
Investment in shares 5000 Notes Payable (Long-term) 1300
Investment in Bonds 2200 Notes Payable 11000
Inventories 5100 Accounts Payable 2100
Prepaid Insurance 400 Salaries payable 1600
Notes receivable 1000 Interest payable 1350
Accounts receivable 7000
Instruction: Prepare a Balance Sheet as per Schedule III.

Part – I
Franklin Company
Balance Sheet for the year ended: 31 March, 2018 (Rs. In '000)
Figures for the
Note Current
Particulars
No. Reporting
Period
I. EQUITY AND LIABILITIES
(1) Shareholders’ funds
(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
FRSA Module 3 – Problems and Solutions

(c) Other current liabilities

(d) Short term provisions
TOTAL 61400
II. 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 Liabilities

Mortgage Payable 10000
Notes Payable (Long-term) 1300
11300

Note 2: Current Liabilities

Notes Payable 11000
Accounts Payable 2100
Salaries Payable 1600
Interest Payable 1350
16050

Note 3: Non-Current Assets

Land 10000
Equipment (Less Depreciation) 19000
Goodwill 3100
32100
 FRSA Module 3 – Problems and Solutions

Note 4: Non-Current Investments

Investment in Shares 5000
Investment 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 21000

Short-term investments 12000 Accounts Payable 4600
Accounts receivables 8500 Salaries and Wages Payable 5800
Notes Receivables 5000 Unearned service revenue 1500
Inventory 6500 Interest Payable 750
Prepaid Insurance 500 Mortgage Payable 15000
Investment in Stocks 5000 Notes Payable (Long term) 4350
Investment in Real Estate 4500 Owner's Capital 35000
Accumulated Depreciation in
Land 15000 3500
equipment
Equipment 25000 Patents 2500
Instruction: Prepare a Balance Sheet as per Schedule III.

Part – I
Xpress Transport Corporation
Balance Sheet for the year ended: 31 March, 2018 (Rs. In '000)
Figures for the
Note Current
Particulars
No. Reporting
Period
I. EQUITY AND LIABILITIES
(1) Shareholders’ funds
(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
FRSA Module 3 – Problems and Solutions

(d) Long term provisions

(4) Current liabilities 2 33650
(a) Short term borrowings
(b) Trade payables
(c) Other current liabilities
(d) Short term provisions
TOTAL 88000
II. ASSETS
(1) Non-current assets
(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 Liabilities

Mortgage Payable 15000
Notes Payable (Long-term) 4350
19350

Note 2: Current Liabilities

Notes Payable 21000
Accounts Payable 4600
Salaries and Wages Payable 5800
Interest Payable 750
Unearned Service Revenue 1500
33650

Note 3: Non-Current Assets - Fixed Assets

 FRSA Module 3 – Problems and Solutions

Land 15000
Equipment (Less Depreciation) 21500
36500

Note 4: Non-Current Investments

Investment in Stocks 5000
Investment 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 29250

Accounts Payable 25500 Investment (Short Term) 15000
Interest Payables 1500 Prepaid Expenses 1000
Loan from Bank 10000 Inventories 50000
Loan on Mortgage 20000 Furniture 18000
Retained Earnings 10000 Plant and Equipment 20000
Capital 143000 Land and Building 40000
Cash in hand 1400 Freehold Land 20000
Cash at Bank 10700 Good Will 20000
Instruction: Prepare a Balance Sheet as per Schedule III.

Part – I
Ranbaxy Pharma Co. Ltd.,
Balance Sheet for the year ended: 31 March, 2018 (Rs. In '000)
Figures for the
Note Current
Particulars
No. Reporting
Period
I. EQUITY AND LIABILITIES
(1) Shareholders’ funds
(a) Share capital 143000
(b) Reserves and surplus 10000
(2) Share application money pending allotment
(3) Non-current liabilities 1 30000
 FRSA Module 3 – Problems and Solutions

(4) Current liabilities 2 42350

TOTAL 225350
II. ASSETS
(1) Non-current assets
(a) Fixed assets
(i) Tangible assets 3 98000
(ii) Intangible assets 20000
(2) Current assets 4 107350
TOTAL 225350

Note 1: Non-Current Liabilities

Loan from Bank 10000
Loan on Mortgage 20000
30000
Note 2: Current Liabilities
Notes Payable 15350
Accounts Payable 25500
Interest Payable 1500
42350

Note 3: Non-Current Assets - Fixed Assets

Furniture 18000
Plant and Equipment 20000
Land and Building 40000
Freehold Land 20000
98000
Note 4: Current Assets
Current investments 15000
Inventories 50000
Trade receivables 29250
Cash 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) 600,000
Property, Plant and Equipment 1,040,000
Salaries and Wages 100,000
Sales 1,460,000
Cost of Goods Consumed 760,000
Share application money pending allotment 50,000
 FRSA Module 3 – Problems and Solutions

Creditors 100,000
Goodwill 90,000
Debtors 200,000
10% Debenture 100,000
General Reserve 50,000
Discount & Interest 40,000
Other Expenses 80000
Cash 120,000
Interest 10,000
2,400,000 2,400,000
Tax @ 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 31.3.2017

Particulars Note no. Rs.
Income :
Revenue from operations 1,460,000
Other Income 40,000
Total incomes (A) 1,500,000
Expenses :
Cost of Goods Consumed 760,000
Employee benefit expenses 100,000
Other Expenses 80,000
Depreciation
Financial Cost (interest) 10,000
Total expenses (B) 950,000
Profit before tax (A-B) 550,000
Less: Income tax (30%) 165,000
Profit after tax 385,000
EPS = Profit after tax/No. of equity shares 6.416667

Balance Sheet of Cadila as on 31-03-2017

Particulars Note No. Rs.
Equity and Liabilities:
(1) Share Holders' funds:
(a) Share capital 600,000
(b) Reserves and Surplus 435,000
Share application money 50,000
(3) Non-Current liabilities:
10% Debentures 100,000
 FRSA Module 3 – Problems and Solutions

(4) Current Liabilities 100,000

Tax Provision 165,000
Total Liabilities 1,450,000
Assets:
(1) Non-Current Assets:
(a) Tangible assets 1,040,000
(b) Intangible assets 90000

(2) Current Assets 320,000

Total Assets 1,450,000

Q.No 2: The following is the Trial Balance of Clarion Limited as on 31.3.2018

Particulars Debit (Rs.) Credit (Rs.)
Share Capital ( 25000 shares of 10 each) 250,000
Property, Plant and Equipment 850,000
Salaries and Wages 85,000
Sales Revenue 1,250,000
Cost of Goods Consumed 640,000
Share application money pending allotment 25,000
Short Term Borrowings 112,000
Patents 90,000
Trade Receivables 32,000
Bank Loan for 10 Years 80,000
Other Expenses 6,000
Cash 7,500
Reserves and Surplus 20,000
Inventories 14,000
Investment in Bonds 2,500
Interest 10,000
1,737,000 1,737,000
Tax @ 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 31.3.2018

Particulars Note no. Rs.
Income :
Revenue from operations 1,250,000
Other Income 0
Total incomes (A) 1,250,000
Expenses :
 FRSA Module 3 – Problems and Solutions

Cost of Goods Consumed 640,000

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

Balance Sheet of Clarion for the year ending 31.3.2018

Particulars Note No. Rs.
Equity and Liabilities:
(1) Share Holders' funds:
(a) Share capital 250,000
(b) Reserves and Surplus 376,300
Share application money 25,000
(3) Non-Current liabilities:
Bank Loan 80,000
(4) Current Liabilities 112,000
Tax Provision 152,700
Total 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 31.3.2018

Particulars Debit Rs. Credit Rs.
Revenue 377,600
Material Purchases 64,000
Salaries and Wages 124,000
Other Expenses 140,600
Finance Cost 350
Investment Income 800
 FRSA Module 3 – Problems and Solutions

Property 94,500
Accumulated Depreciation on Property 24500
Stock 46,700
Trade Receivables 31,150
Trade Payables 27,800
Bank Overdraft 2,300
Equity Shares (5000 Shares @ Rs.10 each) 50,000
Retained Earnings 15600
Deferred Tax Liability 2700
501,300 501,300
Tax @ 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 31.3.2018

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

EPS = Profit after tax/No. of equity shares 1.3846

Balance Sheet of Keystone Limited for the year ending 31.3.2018

Particulars Note No. Rs.
Equity and Liabilities:
(1) Share Holders' funds:
(a) Share capital 50,000
(b) Reserves and Surplus 50,215
Share application money
(3) Non-Current liabilities:
Deferred Tax Liability 2,700
 FRSA Module 3 – Problems and Solutions

(4) Current Liabilities

Trade Payables 27,800
Bank Overdraft 2,300
Tax Provision 14,835
Total 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 46,700
Total 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) 1,000,000
Share Capital: Issued 40,000 shares of 10 each) 400,000
Bank 80,000
Salaries 180,000
PF Contribution 10,000
Revenue:
BFSI Segment 400,000
Telecom Segment 200,000
Manufacturing Segment 400,000
Software development expenses 100,000
Government grant for R&D 50,000
Creditors 50,000
Printing & Stationery 10,000
Debtors 200,000
General Reserve 50,000
Plant and Equipment on 1.4.2017 60,000
Plant and Equipment added on 1.1.2018 10,000
Discount & Interest 40,000
P&L Account as on 1.4.2017 130,000
Visa Charges 30,000
Land 900,000
 FRSA Module 3 – Problems and Solutions

Cash 120,000
Audit Fees 20,000
1,720,000 1,720,000

ADJUSTMENTS
1. Income tax rate is 30%
2. Depreciate Plant & Equipment at 10% p.a.
3. Dividend proposed Rs 2 per share
4. Dividend Distribution Tax 16%
5. Outstanding Salary Rs. 10,000
6. Prepaid Audit Fees Rs. 5,000
Required:
(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 31.3.2018

Particulars Note No. Rs.
Sales 1 1,000,000
Other Income 2 90,000
Total incomes (A) 1,090,000
Expenses :
Software development expenses 100,000
Employee benefit expenses 3 200,000
Other Expenses 4 55,000
Depreciation on PPE 5 6,250
Total expenses (B) 361,250
Profit before tax (A-B) 728,750
Less: Income tax (30%) 218,625
Profit 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 10,000
Telecom Segment 200,000 Visa Charges 30,000
Manufacturing Segment 400,000 Audit Fees [20,000 - 5,000] 15,000
Total 1,000,000 Total 55,000
Note 2 Other Income Note 5 Dep & Amortisation
Govt Grant 50,000 P,P&E Dep [6,000 + 250] 6,250
Discount & Interest 40,000 Total 6,250
Total 90,000
Note 3 Employee benefit exp
Salaries [1,80,000 + 10,000] 190,000
 FRSA Module 3 – Problems and Solutions

PF contribution 10,000
Total 200,000

Balance Sheet of Tech Mahindra as on 31-03-2018

Particulars 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 8 152,800
Total Liabilities 1,368,750
Assets:
(1) Non-Current Assets:
(a) Tangible assets Less Dep 9 963,750
(2) Current Assets 10 405,000
Total Assets 1,368,750

Note 6 Share Capital Note 9 Tangible Assets

Rs. Plant and Equipment on 1.4.2017 60,000
1,000,00 Plant and Equipment added on
Authorised 10,000
0 1.1.2018
Issued & Paid up 400,000 Less: Dep -6,250
Total 400,000 Land 900,000
Note 7 Reserves & Surplus Total 963,750
P&L Account as on 1.4.2017 130,000 Note 10 Current Assets
Add: Current year profits 510,125 Bank 80,000
Add: Gen Reserve 50,000 Debtors 200,000
Less: Dividend Payable [2 x 40,000] -80,000 Cash 120,000
Less: D D Tax 16% -12,800 Prepaid Audit fees 5,000
Total 597,325 Total 405,000
Note 8 Current Liability
O/s Salary 10,000
Income tax (Corporate tax)
Dividend Payable 80,000
D D Tax 12,800
Creditors 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
 FRSA Module 3 – Problems and Solutions

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) 500,000
Machinery 100,000
Salaries 50,000
Sales:
Generics 400,000
Patented Drugs 700,000
Active Pharma Ingredients 3,60,000
Purchases 5,00,000
Share application money pending allotment 50,000
Creditors 1,00,000
Printing & Stationery 30,000
Dealers commission 60,000
Debtors 2,00,000
10% Debenture 1,00,000
General Reserve 50,000
Furniture & Fittings 100,000
Stock of finished goods on 1.4.2016 200,000
Discount & Interest 40,000
P&L account as on 1.4.2016 1,00,000
Wages 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

ADJUSTMENTS
1. 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 5,00,000
4. Dividend proposed Rs 2 per share
5. Dividend distribution tax 16%

REQUIRED
1. Statement of P/L for the year ending 31.03.2017
2. Balance sheet as on 31.03.2017

Statement of P&L of Lupin Limited for the year ending 31.3.2017

 FRSA Module 3 – Problems and Solutions

Particulars Note no. Rs.

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

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

Rs. Rs.
Generics 400,000 On machiery 10,000
Patented Drugs 700,000 On vehicles 45,000
Active Pharma Ingredients 360,000 Total 55,000
1,460,00
Total
0
Note 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 60,000
Total 170,000

Balance Sheet of Lupin Limited as on 31-03-2017

Particulars 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 6 505,500
 FRSA Module 3 – Problems and Solutions

Total Liabilities 1,865,000

Assets:
(1) Non-Current Assets:
(a) Tangible assets 7 1,045,000
(b) Intangible assets 0
(2) Current Assets 8 820,000
Total Assets 1,865,000

Note 5 Reserves & Surplus (Rs.) Note 7 Tangible assets (Rs.)

P&L: Opening 100,000 Machinery less dep 90,000
Add: Current year 675,500 Vehicles less dep 855,000
Add: General reserve 50,000 Furniture 100,000
Less: Dividend proposed (50,000 x
-100,000 Total 1,045,000
2)
Less: Dividend distribution tax -16,000
Total 709,500 Note 8 Current Assets (Rs.)
Note 6 Current Liabilities (Rs.) Cash 120,000
Tax Provision 289,500 Debtors 200,000
Creditors 100,000 Closing stock 500,000
Dividend proposed 100,000 Total 820,000
Dividend 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 31.03.2018

Debit 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
 FRSA Module 3 – Problems and Solutions

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.88,000
2) 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.900
5) 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 31.3.2018

Particulars Note No. Rs.
Sales 340,000
Other Income 3,000
Total incomes (A) 343,000
Expenses :
Cost of Goods Consumed 1 222,000
Employee benefit expenses 2 38,400
Depreciation 3 6,290
Other Expenses 4 12,800
Total expenses (B) 279,490
Profit before tax (A-B) 63,510
Less: Income tax (30%) 19,053
Profit 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 4350
Purchases 245000 Furniture 1700
Less: Purchase returns -10000 Patents 240
Less: Closing Stock -88000 Total 6290
 FRSA Module 3 – Problems and Solutions

Total 222000 Note 4 Other Expenses

Note 2 Employee benefit expenses (Rs.) Carriage 950
Wages 30000 Sundry Trade Expenses 7050
Salaries (Add Outstanding’s) 8400 Rent (Add Outstanding’s) 4800
Total 38400 Total 12800

Balance Sheet of Godrej Industries as on 31-03-2018

Particulars 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 68,653
Total 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 9 175,700
Total Assets 220,210

Note 5 Reserves & Surplus Note 7 Tangible Assets

P&L Account as on 1.4.2017 15,000 Plant and Machinery 24,650
Add: Current year’s profits 44,457 Furniture 15,300
Add: Gen Reserve 15,500 Total 39,950
Less: Dividend Payable [2 x -
Note 8 Intangible Assets
10,000] 20,000
Less: D D Tax 17% -3,400 Patents 4,800
Total 51,557 Less: Amortisation -240
Note 6 Current Liability Total 4,560
O/s Salary 900 Note 9 Current Assets
O/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
 FRSA Module 3 – Problems and Solutions

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 31.03.2018

Debit 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
90,000 Reserve Fund 40,000
1.4.2017
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
50,000
Received
1,190,00
Total Total 1,190,000
0

Adjustments:
1) Closing Stock of finished goods Rs.80,000
2) Outstanding Marketing Expenses Rs.5,000
3) Corporate Tax 30%
4) Depreciation on Plant and Machinery 10% per annum on original cost
5) Amortise patents by 20%
6) Directors Proposed Rs.2 per share as dividend
7) Dividend distribution tax at 17.65%

Required:
 FRSA Module 3 – Problems and Solutions

(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 31.3.2018
Particulars Note No. Rs.
Income :
Revenue from operations 1 690,000
Other Income 2 59,000
Total incomes (A) 749,000
Expenses :
Purchases 170,000
Change in stock (Rs.90,000 – Rs.80,000) 10,000
Other Expenses 3 55,000
Finance Cost 5,000
Depreciation & Amortisation 4 60,000
Total expenses (B) 300,000
Profit before tax (A-B) 449,000
Less: Income tax (30%) 134,700
Profit 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 40,000
Automobiles 190,000 Marketing expenses + O/S 15,000
Railways 120,000 Total 55,000
Off-Highway 70,000 Note 4 Depreciation & Amortisation
Vehicle Aftermarket 110,000 Rs.
Total 690,000 Dep on P&M 40,000
Note 2 Other Income Patents amortised 20,000
Discount & Commission 50,000 Total 60,000
Int on Investment accrued 9,000
Total 59,000
 FRSA Module 3 – Problems and Solutions

Balance Sheet of TVS Motor Company as on 31-03-2018

Particulars 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 6 220,290
Total 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 8 234,000
Total Assets 774,000

Note 5 Reserves & Surplus (Rs.) Note 6 Current Liabilities (Rs.)

P&L: Opening 70,000 Tax Provision 134,700
314,30
Add: Current year Creditors 40,000
0
Add: General reserve 40,000 Dividend proposed 30,000
Less: Interim Dividend -30,000 Dividend distribution tax 10,590
Less: Dividend proposed (15,000 x
-30,000 O/S Marketing exp 5,000
2)
Less: Dividend distribution tax -10,590 Total 220,290
353,71
Total
0
Note 7 Tangible assets (Rs.) Note 8 Current Assets (Rs.)
260,00
P&M [4,00,000-1,00,000-40,000] Int Accrued 9,000
0
100,00
Land Debtors 145,000
0
360,00
Total Closing stock 80,000
0
Total 234,000
FRSA Module 3 – Problems and Solutions