FINAL ACCOUNTS OF CORPORATE ENTITIES

Dividend
1. The paid-up capital of Nagarjun Ltd. Consisted of 1,00,000 equity shares of ` 10 each and 10,000, 8% preference shares of ` 100
each. The profit and loss account of the company for the year ended 31st March, 2016 showed net profit before tax of ` 4,00,000.
The net profit brought forward from previous year's balance sheet amounted to ` 1,20,000. The company makes a provision of
30% for income tax. Following appropriations were proposed by the company:
i. To pay dividend on preference shares.
ii. To pay final dividend @ ` 1 per share to equity shareholders.
iii. To transfer 10% of the current profit to general reserve.
iv. Provide corporate dividend tax @ 20% (including surcharge and cess) of dividend.
Prepare Notes to Accounts on respect of Reserve and Surplus as per Schedule III of the Companies Act, 2013. B.Com(H) 2016

2. The paid-up capital of AB Ltd. consisted of 500 lakhs equity shares of ` 10 each and 30 lakhs 10% preference shares of ` 100
each. Interim dividend at the rate of 10% was paid during the year ended 31st March, 2013. There was a credit balance of ` 1,250
lakhs in profit and loss account brought forward from the previous year. The net profit before tax amounted to ` 3,200 lakhs for
2012-13. The company pays tax @ 35%. The Board of Directors in its meeting decided:
i) To propose preference dividend for current year.
ii) To propose final dividend @ 20% on equity shares excluding interim dividend.
iii) To transfer 10% of the net profits to general reserve.
Pass journal entries to record the above.

3. For the year ended 31st March, 2016; the profit of A Ltd before tax amounted to ` 7,20,000. There was a credit balance of `
4,10,000 brought forward from the previous year. The paid-up capital of the company consisted of 30,000, 6% preference shares
of ` 100 each and 4,00,000 equity shares of ` 10 each. Interim dividend on equity shares was paid during the year at 7.5%. The
following appropriations were passed at the annual general meeting of the company:
i. To pay dividend on preference shares
ii. To pay a final dividend of 5% on equity share capital
iii. To provide taxation ` 2,00,000
iv. To transfer 2.5% of current year’s profits to General Reserve.

Write up the “Reserves and Surplus” to be shown in notes to accounts. B.Com(H) 2017

INCOME TAX
1. Extracts from a Trial Balance of a company as on 31st March, 20X3
Particulars Dr. (`) Cr. (`)
Provision for taxation (20X1-20X2) 2,50,000
Advance Income Tax (for 20X1-20X2) 2,60,000
Advance Income Tax (for 20X2-20X3) 3,00,000
Additional Information
1. The actual tax liability for the year 20X1-20X2 amounted to ` 2,75,000.
2. Provision for taxation for the year 20X2-20X3 of ` 2,85,000 is required to be made.
Show the relevant information in the relevant ledgers.

2. The following items appear in the Trial Balance of B Ltd. as at 31st March, 20X6
Particulars Dr. (`) Cr. (` )
Advance Payment of Tax (for 20X4-20X5) 4,50,000
Advance Payment of Tax (for 20X5-20X6) 6,00,000
Provision for taxation (20X4-20X5) 5,00,000
Net profit subject to tax @35% 20,00,000
Prepare Journal, Profit and Loss Account and Balance Sheet if the actual tax liability for 20X4-X5 was settled for [a] ` 5,00,000 [b] `
4,50,000 [c] ` 4,00,000 [d] ` 5,50,000 but no accounting effect has yet been given.

3. The following are the extracts from the Trial Balance of Dabang Ltd. on 31st March, 20X3;
Debit (`) Credit (`)
Provision for tax (20X1-20X2) - 2,00,000
Advance tax paid for 20X1-20X2 1,80,000 -
Advance tax paid for 20X2-20X3 1,00,000 -
Tax deducted at source (20X2-20X3) 10,000 -
Profit and Loss A/c (20X1-20X2) - 2,00,000
The assessment for the year 20X1-20X2 was finalised during the year 20X2-20X3. The total tax liability for that year was fixed at `
2,20,000. The net profit earned by the company during 20X2-20X3 before tax amounts to ` 4,00,000. The company is in 35% tax
bracket (inclusive of any surcharge and cess).
Pass journal entries and show how the various items will appear in the company's Balance Sheet. B.Com(H) 2011

4. X Ltd paid advance tax for the financial year 20X4-X5 in different instalments totalling ` 1,50,000. It also paid advance income
tax in different instalments totalling ` 1,60,000 and ` 1,70,000 in the years 20X5-20X6 and 20X6-20X7, respectively. It
received income from investment in 9% Debentures issued by Y Ltd, on which tax was deducted by Y Ltd amounting to `
15,000 each in the years 20X4-20X5, 20X5-20X6 and 20X6-20X7. It made the provision for current tax amounting to `
1,55,000 in the year 20X4-20X5, ` 170,000 in the year 20X5-20X6 and ` 1,80,000 in the year 20X6-20X7. The actual income
tax liability for the assessment year (related to previous year 20X4-20X5) has been finalized at ` 1,75,000 after completion of
assessment in the year 20X6-20X7. The additional income tax liability or the refund of the income tax, if any, as a result of
completion of assessment is paid/received immediately, as the case may be. 1
Pass journal entries and prepare the necessary ledger accounts in the books of X Ltd related to income tax from the financial
year 20X4-20X5 till and consequent to the completion of assessment for financial year 20X4-20X5 in the financial year 20X6-
20X7. Show the extract of the Statement of Profit and Loss and the Balance Sheet as at 31st March, 20X7.
 Preparation of financial statements
1. From the under mentioned Trial Balance of ABC Ltd, prepare a Profit and Loss Statement for the year ended 31 st March, 20X6 and
the Balance Sheet on that date:
Debit balances ` Credit balances `
Opening stock 3,00,000 Equity share capital (10,000 shares of ` 10,00,000
Purchases 6,09,000 100 each)
Wages 5,52,000 5% Debentures 2,50,000
Discount 15,000 Sales 18,50,000
Fuel 25,700 Creditors 80,000
Building 7,00,000 Bank overdraft 1,20,000
Carriage inward 11,750 Discount 23,000
Sundry debtors 2,00,000 Return outward 1,000
Goodwill 1,30,000
Short term investments 1,50,000
Plant and machinery 2,50,000
Loose tools 60,000
General expenses 1,74,000
Bad debts 10,300
Debenture interest (half year up to 30-09-20X5) 6,250
Cash at bank 1,30,000
33,24,000 33,24,000
Additional Information:
i. The authorised capital of the company is ` 20,00,000.
ii. Stock on 31.3.20X6 was ` 3,50,000.
iii. Depreciate Plant and Machinery by 20% and revalue loose tools at ` 41,000.
iv. Provide 2% as bad debt reserve.
v. Final dividend 15% and transfer ` 11,644 to General Reserve was proposed by the Board of Directors.
vi. Rate of income tax is 30%.
[Profit – ` 3,08,525; B/S Total – ` 18,97,000] [B.Com(H) 2017]

2. Sakshi Ltd has authorised share capital of ` 20,00,000 consisting of 2,00,000 equity shares of ` 10 each. The following is the Trial
Balance of the company as at 31st March, 20X6.
Debit balances Amount (`) Credit balances Amount (`)
Call in arrear (on 20,000 shares @ ` 5 per share) 1,00,000 Sales 78,10,000
Purchases 43,85,000 Creditors 2,50,000
Advance tax paid 12,25,000 12% Debentures 5,00,000
Salaries 10,00,000 General reserve 2,90,000
Selling expenses 11,00,000 Provision for depreciation on plant 2,50,000
Rent 60,000 Provision for depreciation on furniture 1,50,000
Interest on debentures 50,000 Securities premium 2,25,000
Plant 12,50,000 Surplus (P&L A/c) (1-4-20X5) 60,000
Furniture 6,50,000 Provision for bad debts 15,000
Debtors 4,00,000 Commission 50,000
Discount on issue of debentures 5,000 Equity share capital (1,00,000 equity shares of ` 10,00,000
Stock (1-4-20X5) 2,25,000 10 each)
Bad debts 25,000 Provision for tax (1-4-20X5) 6,25,000
Bank 2,25,000
Land & building 5,25,000
1,12,25,000 1,12,25,000
Additional Information:
i. Rent ` 10,000 is outstanding.
ii. Provide depreciation on plant at 20% per annum and on furniture at 10% per annum on written down value basis.
iii. Maintain a provision of doubtful debt at 5% on debtors.
iv. Make a provision of 30% for income tax.
v. The company proposed a dividend at 10% on paid up share capital.
vi. Closing stock is ` 10,00,000.
vii. Transfer ` 1,00,000 to the general reserve.
viii. Debentures were issued on 1-4-20X5.
You are required to prepare:
i. Statement of Profit and Loss for the year ended 31st March, 20X6.
ii. Balance sheet in the prescribed form as at 31st March, 20X6 as per schedule III of Companies Act, 2013.
[Profit – ` 12,18,000; B/S Total – ` 46,10,000] B.Com(H) 2016

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3. From the following particulars relating to EXE Ltd., prepare the Balance Sheet as at 31st March, 20X5:
Particulars Dr. (`) Cr. (`) The following additional information is also provided:
Equity Share Capital (Face value ` 100 each) 5,000,000 i. 10,000 equity shares were issued for consideration
Call in Arrears (on 500 shares) 5,000 other than cash.
Land and Building 2,750,000 ii. Debtors of ` 2,60,000 are due for more than 6
Plant and Machinery 2,625,000 months.
Furniture 250,000 iii. The cost of the assets was: Building ` 30,00,000;
General Reserve 1,050,000 Plant and Machinery ` 35,00,000 and Furniture `
3,12,500.
Loan from State Financial Corporation 750,000 iv. The balance of ` 7,50,000 in the loan account with
Stock: Raw Materials 2,50,000 State Finance Corporation is inclusive of ` 37,500
Finished Goods 10,00,000 1,250,000 for interest accrued but not due. The loan is
Provision for taxation 340,000 secured by hypothecation of Plant and Machinery.
Sundry debtors 1,000,000 v. Balance at bank includes ` 10,000 with Idea Bank
Advances 213,500 Ltd. which is not a scheduled bank.
Profit and Loss Account 7,33,500 vi. Dividend proposed on equity share capital is `
Cash in hand 150,000 3,00,000.
Cash at bank 1,235,000 B.Com(H) 2015 [B/S Total - ` 94,73,500]
Unsecured loan 605,000
Sundry creditors (for goods and expenses) 10,00,000
94,78,500 94,78,500

4. The following balances are extracted from the books of P Ltd. for the year ended 31st March, 20X3.
Particulars Debit (`) Credit (`) Additional Information:
Building 1,200,000 i. Provide depreciation @10% on fixed
Furniture 120,000 assets.
Motor vehicles 115,000 ii. Stock has been valued at ` 7,20,000 on
Investments (Long term) 805,000 31.3.20X3.
Purchases 1,500,000 iii. Debtors of ` 1,60,000 are due for more
Stock in trade at cost (1.4.20X2) 800,000 than 6 months.
iv. Provide for taxation @ 40%, and for
Debtors (considered good) 560,000 proposed dividend @ 20%.
Advance against construction of building 260,000 Prepare Profit and Loss Statement for
Cash and bank balance 344,000 the year ended 31st March, 20X3 and
Share capital (2,00,000 equity shares of ` 10 each) 2,000,000 Balance Sheet as per Revised Schedule
Creditors 700,000 as on that date. B.Com(H) 2014
Sales 3,500,000 [Profit – ` 7,44,300; B/S Total – ` 39,80,500]
Profit and Loss Account (1.4.20X2) 40,000
Dividend received on investments 20,000
Salaries and wages 440,000
Directors fees 16,000
Electricity charges 50,000
Rates, taxes and insurance 20,000
Auditors fees 30,000
6,260,000 6,260,000

5. Following is the Trial Balance of Exe Ltd. as on 31st March, 20X3:

Debit Balances ` Additional Information:
Stock (1.4.20X2) 3,00,000 i. Stock as on 31st March, 20X3 was valued at
Purchases 9,80,000 ` 3,52,000.
Wages 1,20,000 ii. Depreciate computers @ 15%, furniture @
Debtors 1,50,000 10% and patents @ 5%.
Carriage Inward 4,000 iii. Make a provision for doubtful debt of `
Furniture 68,000 840.
iv. On 31st March, 20X3 salaries and rent
Salaries 30,000 were outstanding to the extent of ` 4,000
Rent 16,000 each.
General Expenses 28,000 v. Make a provision for tax @ 40%.
Dividend Paid (20X1-X2) including Corporate Dividend Tax 36,000 vi. The directors proposed a dividend @ 15%
Computers 1,16,000 for the year ended 31st March, 20X3 after
Cash and Bank Balance 1,44,800 transfer of 5% profit to general reserve.
Patents 19,200 vii. Provide for manager’s commission at 10%
Bills Receivable 20,000 of net profits before tax and manager’s
20,32,000 commission.
Credit Balances Prepare Profit and Loss Statement for the year
Sales 13,60,000 ended 31st March, 20X3 and a Balance Sheet (as
Purchase Returns 40,000 per revised schedule) as on that date after taking
Discount 12,000 into account the above adjustments.
Creditors 70,000 B.Com(H) 2013
[Profit – ` 1,36,080; B/S Total – ` 8,44,000]
Profit and Loss Account (1.4.20X2) 60,000
Share Capital 4,00,000
General Reserve 62,000
Bills Payable 28,000
20,32,000

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6. From the following balances of Beta Ltd. for the year ended 31st March, 20X2, prepare final accounts of the company taking into
account the additional information:
` Additional Information:
Building (Cost ` 40,000) 30,000 i. Provide 10% depreciation on
Furniture (Cost ` 1,000) 500 original cost of all assets.
Motor vehicles (Cost ` 3,500) 3,000 ii. Provide ` 10,000 in respect of tax
Investment in equity shares (Market value ` 22,000) 20,000 for the current year.
Investment in 500 preference shares of ` 10 each ` 6 paid up 3,000 iii. Write back ` 200 liability included
Stock in trade at cost 20,000 in sundry creditors.
Bills receivable 5,000 iv. Net Realisable value of stock is `
18,000.
Sundry debtors 14,000 v. Dividend is proposed @20% for
Cash at bank 8,750 20X1-X2.
Share Capital: 5,000 equity shares of ` 10 each 50,000 vi. Write off discount on issue of
6% mortgage debentures 10,000 debentures. B.Com(H) 2012
Provision for tax 10,000 [Profit – ` 11,400; B/S Total – ` 97,800]
Sundry creditors 5,500
Discount on issue of debentures 400
Profit and Loss A/c (Credit) 1,000
Gross Profit 50,000
Dividend received 700
Salaries 10,000
Directors fees 400
Interest paid on debentures 500
Auditors fees 650
Trade expenses 11,000

7. The following balances appeared in the books of Mera Bharat Mahan Ltd. as on 31st March, 20X2:
Debit balances ` Credit balances `
Building at cost 150,000 Equity Share Capital 600,000
Purchases 500,900 General Reserve 250,000
Salaries and Wages(relating to Manufacturing) 359,000 Unclaimed dividend 6,520
Establishment charges 26,810 Trade creditors 36,880
General charges 31,090 Sales 1,083,940
Machinery at cost 200,000 Provision for depreciation: 71,000
Motor Vehicles at cost 30,000 Building – `30,000
Furniture at cost 5,000 Machinery – ` 35,000
Opening stock 172,050 Motor Vehicles – ` 5,000
Book debts 223,380 Furniture – ` 1,000
Investments 288,950 Interest on investments 8,540
Advance payment of income tax 50,000 Profit and Loss A/c (1-4-20X1) 16,840
Cash balance 72,240 Staff Provident Fund 37,500
Directors fees 1,800
2,111,220 2,111,220
From these balances and the following information, prepare the Company's Balance Sheet as on 31st March, 20X2 and its Profit and Loss Account
for the year ended on that date:
a) Stock on 31st March, 20X2 was valued at ` 1,48,680.
b) Provide ` 10,000 for depreciation [building – ` 3,500; machinery – ` 4,500; Motor Vehicles – ` 1,500; Furniture – ` 500] on fixed assets,
` 1,800 for Managing Directors' remuneration and ` 6,200 for the company's contribution to Staff Provident Fund.
c) Interest accrued on investments amounted to ` 2,750.
d) A provision of ` 50,000 for taxes in respect of the profit for 20X1-20X2 considered necessary.
e) The Board of Directors propose a final dividend @8% after transfer to General Reserve ` 30,000.
f) A claim of ` 2,500 for workmen's compensation is being disputed by the company.
B.Com(H) 2011 [Profit – ` 84,260; B/S Total – ` 10,90,000]

8. Sonal Antriksh Ltd. has authorised share capital of ` 30,00,000 consisting of 3,00,000 equity shares of ` 10 each. The following is the
trial balance of the company as at 31st March, 20X9:
Debit ` Credit ` Additional Information:
Call in Arrear (` 5 per share) 200,000 Sales 15,620,000 i.Rent ` 20,000 is outstanding.
Purchases 8,770,000 Creditors 500,000 ii.Plant includes plant costing ` 50,000
Advance tax paid 2,450,000 12% Debentures 1,000,000 purchased on 1st October 20X8. Provide
Salaries 2,000,000 General Reserves 580,000 depreciation on plant at 20% per annum
and on furniture at 10% per annum on
Selling expenses 2,200,000 Provision for depreciation on: written down value basis.
Rent 100,000 Plant 500,000 iii.Maintain a provision for doubtful debts at
Prepaid rent 20,000 Furniture 300,000 5% on debtors.
Interest on debentures 100,000 Securities premium 450,000 iv.The company proposed a dividend of 10%
Plant 2,500,000 Profit & Loss A/c 120,000 on paid up share capital.
Furniture 1,300,000 Provision for doubtful debts 30,000 v.Make a provision of 35% for income tax
Debtors 800,000 Commission 100,000 (including surcharge and cess).
Discount on issue of debentures 10,000 Equity share capital 2,000,000 vi. Closing stock is ` 20,00,000.
Stock 450,000 Provision for tax 1,250,000
B. BCom(H) 2010 [Profit – ` 22,78,250; B/S Total – `
Bad debts 50,000
92,45,000]
Bank balance 450,000
Buildings 1,050,000
22,450,000 22,450,000
You are required to prepare Profit and Loss A/c and Balance sheet in the prescribed form as at 31st March, 20X9.