This assignment consists of 5 analytical covering the syllabus till Analysis of Financial Statements.
Problem 1:
Journalize the following transactions in the books of Mr. Walter:
a) Paid rent of building $ 12,000 half of the building is used by the proprietor for residential use.
b) Paid fire insurance of the above building in advance $ 1,000.
c) Paid life insurance premium $ 2,000.
d) Paid income-tax $ 3,000.
e) Salary due to clerk $ 500.
f) Charge depreciation on furniture @ 10% p.a. for 1 month (furniture $ 12,000).
g) Provide interest on capital ($ 60,000) at 15% p.a. for 6 months.
h) Charge interest on drawing (10,000) at 18% p.a. for 6 months.
i) Provide interest on loan to Ram ($ 100,000) at 18% p.a. for 2 months.
j) Charge interest on loan to Shyam ($ 200,000) at 18% p.a. for 2 months.
k) Received commission $ 1,000 half of which is in advance.
l) Brokerage due to us $ 500.
Problem 2:
From following figures extracted from the books of Mr. XYZ, you are required to prepare a Trading & Profit & Loss Account for the year ended 31st March, 2008 and a Balance Sheet as on that date after making the necessary adjustments.
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$
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$
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Mr. XYZ's Capital
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228,800
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Stock 1.4.2007
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38,500
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Mr. XYZ ' Drawings
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13,200
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Wages
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35,200
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Plant & Machinery
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99,000
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Sundry creditors
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44,000
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Freehold property
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66,000
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Postage & Telegrams
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1,540
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Purchases
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110,000
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Insurance
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1,760
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Rtuens outwards
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1,100
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Gas & fuel
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2,970
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Salaries
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13,200
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Bad debts
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660
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Office Expenses
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2,750
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Office rent
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2,860
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Discount A/c (Dr.)
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5,500
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Loose tools
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2,900
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Sundry Debtors
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29,260
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Factory lighting
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1,100
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Loan to Mr. Krish @10% p.a.
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44,000
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Provision for doubtful debts
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880
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Balance on 1.4.2007
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Interest on loan to Mr. Krish
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1,100
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Cash at bank
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29,260
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Cash in hand
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2,640
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Bills payable
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5,500
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sales
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231,440
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Adjustments:
a) Stock on 31st March, 2008 was valued at $ 72,600
b) A new machine was installed during the year costing $15,400 but it is not recorded in the books as on payment was made for it. Wages $ 1,100 paid for its erection has been debited to the wages account.
c) Depreciate :
a. Plant & machine by 33.33%
b. Furniture by 10%
c. Freehold property by 6%
d) Loose tools were valued at $ 1.760 as on 31.3.2008
e) Of the sundry debtors Rs.660 are bad and should be written off.
f) Maintain a provision of 5% on sundry debtors for doubtful debts.
g) The manager is entitled to a commission of 10% of the net profits after charging such commission.
Problem 3:
Following is the Trial Balance of M/s. Trinity Foods as on 30th June 2007 (after closing Nominal Accounts). Prepare a Balance Sheet on the basis of this trial balance.
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Particulars
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Debit (Rs.)
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Credit (in Rs.)
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Cash
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10,000
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Capital
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100,000
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Bank
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77,000
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Furniture
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25,000
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Ram
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15,000
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Rahim
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50,000
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Trading & Profit & Loss
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47,000
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162,000
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162,000
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Problem 4:
Given below are the financial statements of Safal Enterprises, using the tool of ratio analysis comment on the profitability and liquidity position of the firm for the year 2006-07. Total no. of shares outstanding for the firm is 2.69crores. In the view of growth opportunities in the near future the firm has been maintaining a policy of 45% payout.
Summarized P & L of Safal Enterprises
For the year ended 31 March
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Particulars
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2006
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2007
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( Rs. In crores)
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Sales
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132.00
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144.00
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Other income
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12.00
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15.00
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Cost of sales
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102.96
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110.02
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Gross margin
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29.04
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33.98
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Operating expenses
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Administration
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12.44
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14.36
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Selling & distribution
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4.42
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5.36
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Profit before interest & tax (PBIT)
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24.18
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29.26
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Interest
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3.00
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4.01
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Profit before tax (PBT)
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21.18
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25.26
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Provision for taxes
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7.94
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9.47
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Profit after tax (PAT)
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13.24
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15.79
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Balance Sheet of Safal Enterprises
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Particulars
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31/03/06
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31/03/07
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(Rs in crores)
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Assets
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Fixed assets
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31.25
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37.50
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Current assets
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Inventory
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14.56
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16.64
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Accounts receivable
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13.20
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15.43
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Cash
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1.50
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1.75
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Less: Current liabilities
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8.55
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11.25
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Net current assets
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20.71
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22.57
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Total Assets
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51.96
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60.07
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Liabilities &owners equity
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Share capital
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27.00
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27.00
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Reserves & Surplus
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4.96
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6.36
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Debt(long term)
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20.00
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26.71
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Total
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51.96
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60.07
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Problem 5:
Given below are the balance sheets of the two firms- Gloria Ltd and Victoria Ltd as on 31st March 2007.
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Gloria Ltd.
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Victoria Ltd.
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Assets
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Cash and Bank balance
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12.70
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38.60
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Marketable securities
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10.00
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21.00
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Sundry debtors
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22.00
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23.70
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Prepaid expenses
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93.50
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162.45
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Current Assets
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1.12
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2.14
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Fixed Assets (Net)
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139.32
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247.90
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Total Assets
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589.00
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642.00
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728.323
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889.895
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Liabilities and Owners Equity
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Sundry creditors
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6.75
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26.45
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Notes payable
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6.56
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6.45
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Long term debt
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130.01
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345.00
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Equity
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585.00
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512.00
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Total
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728.323
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889.895
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- Can the financial positions of the two firms be compared assuming that the two firms fall in the same industry?