16. COMPANY FINAL ACCOUNTS

Transcription

1 16. COMPANY FINAL ACCOUNTS SOLUTIONS TO ASSIGNMENT PROBLEMS PROBLEM NO.1 Journal Entries in the Books of CODIG Ltd. Date Debit Credit Profit and Loss A/c Dr. To Provision for Income Tax A/c (Being provision for income tax for made) Profit and Loss Appropriation A/c Dr. To Provision for Income Tax A/c (Being previous year provision for income tax short fall charged to Profit and Loss Appropriation A/c) Provision for Income Tax A/c Dr. To Income Tax Payable A/c (Being Provision Transfer to Income Tax Payable A/c for final settlement) Income Tax Payable A/c Dr. To Advance tax A/c (Being the advance tax for adjusted against income tax payable account) 40,000 2,20,000 40,000 2,20,000 Balance Sheet of CODIG Ltd. as at (Extract) Current Liabilities: Other Current Liabilities (Income Tax Payable) Short term provision (Provision for Income tax) Current Assets: Short term loans and advances (Advance tax) Amount 20,000 2,30,000 2,30,000 2,30,000 Working Note: Dr. Provision for Income Tax A/c Cr. Amount Amount To Income Tax Payable A/c To Balance c/d 4,0,000 By Balance b/d By Profit & Loss Appropriation A/c By Profit & Loss A/c 40,000 4,0,000 Copy Rights Reserved To, Guntur IPCC_34e_Accounts_Group-I_Company Final Accounts_ Assignment Solutions 1

2 Ph: /26 Dr. Advance Tax A/c Cr. Amount Amount To Balance b/d 4,0,000 By Income Tax Payable A/c 2,20,000 By Balance c/d 2,30,000 4,0,000 4,0,000 Dr. Income Tax Payable A/c Cr. Amount Amount To Advance Tax 2,20,000 By Provision for Income Tax To Balance c/d 20,000 Hint given in the question is wrong. PROBLEM NO.2 Calculation of Managing Directors Remuneration: Net Profit after charging for provision for tax Add: Provision for tax Net Profit Managing Directors Remuneration (60,20,000 x /0) Amount 43,00,000 17,20,000 60,20,000 3,01,000 PROBLEM NO. 3 (a) Calculation of Effective Capital** of the Company Rs. In '000 Paid-up capital Add: Reserves and surplus Securities premium Long term loans Less: Investments 3,600 Preliminary expenses 3,000 Effective capital for the purpose of managerial remuneration 18,000 7,200 1,200 6,000 32,400 (6,600) 2,800 As effective capital is less than Rs. crores but more than Rs.1 crore, therefore maximum remuneration payable to the Managing Director should Rs.2,0,000 per month. So, maximum remuneration payable to the Managing Director for the year (Rs.2,0,000 x 12) =Rs.30,00,000 PROBLEM NO. 4 According to Section 123 of the Companies Act, 2013 dividend out of reserves may be declared in accordance with the Companies (Declaration of dividend out of Reserves) Rules, These rules provided the following four conditions to be fulfilled. Step-1 Maximum withdrawal of Reserve if condition (i) is satisfied = % of Paid up Capital and free reserves = % of (Rs.0 lakh + 20 lakh) = 12 lakh IPCC_34e_Accounts_Group-I_Company Final Accounts_ Assignment Solutions 2

3 Step-2 Maximum withdrawal of Reserve if condition (ii) is satisfied A. Opening Balance of Reserves in the beginning of the year 20,00,000 B. Less: Closing Balance of Reserve being 1% of paid up share capital 1,00,000 C. Reserve available (A B),00,000 Step-3 Permissible withdrawal of Reserve if conditions (i) and (ii) are satisfied = Rs.,00,000 (being lower of limits as per Step 1 and Step 2) Step-4 Maximum Permissible Divisible Profits A. Permissible withdrawal of Reserve (as per Step - 3),00,000 B. Less: Loss to the extent of depreciation 1,00,000 C. Maximum Permissible Divisible profit [A B] 4,00,000 Step- Actual Permissible Rate of Dividend Rs.4 lakh A. Maximum Permissible Rate of Dividend 0 = 4% Rs.0 lakh B. Average Rate of Dividend based on last three years [(11% + % + 9%)/3 ] % C. Maximum Rate of Dividend as % of paid up capital % D. Actual Permissible Rate of Dividend being lowest of three i.e. 4% Comment: The Management can declare dividend only upto a rate of 4%. Here, the management s dividend decision of 8% is not in accordance with the Provisions of Section 123. (1) Credit sales for the year PROBLEM NO. % Amount 1,40, Cash sales for the year Sales 2% 0 % 2,80,000 11,20,000 (2) Dr. Provision for Doubtful debts A/c Cr. Amount Amount To Bad debts A/c To Balance c/d,000 63,000 73,000 By Balance b/d By Profit and Loss A/c IPCC_34e_Accounts_Group-I_Company Final Accounts_ Assignment Solutions 3 7% 8,40,000 1,000 22,000 73,000 Journal Entries Debit Credit Bad debts A/c Dr.,000 To Debtors A/c,000 (Being bad debts written off) Provision for doubtful debts A/c Dr.,000 To Bad debts A/c,000 (Being Provision reduced to the extent of bad debts) Profit and Loss A/c Dr. 22,000 To Provision for doubtful debts A/c 22,000 (Being Profit transferred to provision for doubtful debts A/c)

4 Ph: /26 PROBLEM NO. 6 Yes, Corporate Dividend Tax (CDT) is payable by the company which has provided for the payment of dividend. CDT is payable even if no income tax is payable. This is payable by a domestic company on distribution of profits to its shareholders. In the given case, Corporate Dividend Tax would be worked out to Rs.1,6,000 [i.e. (Rs.,00,000 x 1%) x 1%]. CDT should be accounted for in the same financial year in which provision for dividend is recognized and made. CDT shall be disclosed in profit and loss account below the line just after the provision for dividend. Such disclosure would give a proper picture regarding payments involved with reference to dividends. Disclosure of CDT in the profit and Loss Account will be as follows: Dividend XXXX Corporate Dividend Tax XXXX XXXX PROBLEM NO Computation of Finished Goods in Transit (Rs.000 s) MP OJ Goods sent by Factory (As per Factory Wise Statement Chart 1) Less: Received by Marketing Division (As per Chart 2 in Illustration) 3,380 (3,36) 1,860 (1,80),240 (,21) Finished Goods in Transit Excess of Closing Inventory over Opening Inventory (Rs.000 s) MP OJ Opening Stock of Finished Goods: - At Factory given - In Transit (Received during the year by Marketing Division) - With Marketing Division given Add: Opening Work in Process given Opening Stock of Inventory (Finished Goods & WIP) (A) Closing Stock Finished Goods: - At Factory given - In Transit (Received during the year by Marketing Division (WN-1) - With Marketing Division given Add: Closing work in Process given Closing Stock of Inventory (Finished Goods & WIP) (B) Excess of Closing Inventory Over Opening Inventory (A) (B) Manufacturing and Other Cost (Rs.000 s) MP OJ Manufacturing Costs: IPCC_34e_Accounts_Group-I_Company Final Accounts_ Assignment Solutions 4

5 Other Costs: Raw Material Consumption Employee Cost Power and Fuel Consumable Stores Rates and Taxes Repairs to: Building Machinery Other Assets 2, , ,00 1, Manufacturing Costs 3,216 1,722 4,938 Transport Sales Commission Sales Tax Other Expenses Other Costs 1, Revenue Statement of Fruit Juice Ltd (Sectional and Consolidated) for the year ended 31 st March Mango Pulp (MP) Orange Juice (OJ) (Rs.000 s) % (Rs.000 s) % (Rs.000 s) % Sales Add: Increase in Inventory (WN-2) Gross Revenue: Less: Manufacturing Expenses (WN-3) Other Expenses(Depreciation),000 1,001 (3,216) (1,01) (0) (64.31) (20.30) (2.00) 2, ,17 (1,722) (490) (90) (68.41) (19.47) (3.8) 7, ,18 (4,938) (1,0) (190) (6.68) (20.02) (2.3) Net Profit EQUITY AND LIABILITIES: 1. Shareholders' funds a. Share capital b. Reserves and Surplus 2. Non-current liabilities a. Long-term borrowings 3. Current liabilities a. Trade Payables b. Other current liabilities c. Short-term provisions ASSETS: 1. Non-current assets a. Fixed assets i. Tangible assets 2. Current assets PROBLEM NO. 8 Pioneer Ltd. Balance Sheet as on 31st March, 201 Note No. Amount IPCC_34e_Accounts_Group-I_Company Final Accounts_ Assignment Solutions ,99,000 2,96,700 2,63,00 7,00 1,28,000 18,94, ,2,000

6 Ph: /26 a. Inventories b. Trade receivables c. Cash and cash equivalents d. Short-term loans and advances ,0,000 2,77,000 42,700 18,94,700 Notes to Accounts: 1. Share Capital Equity share capital Issued & subscribed & called up,000 Equity Shares of Rs.0 each,00,000 (Of the above 2,000 shares have been issued for consideration other than cash) Less: Calls in arrears (1,000) 2. Reserves and Surplus General Reserve Surplus (Profit & Loss A/c) 3. Long-term borrowings Secured Term Loans Financial Corporation (Secured by hypothecation of Plant and Machinery) Unsecured 4. Other current liabilities Interest accrued but not due on loans (SFC). Short-term provisions Provision for taxation Proposed Dividend 6. Tangible assets Land Buildings 4,00,000 Less: Depreciation (0,000) Plant & Machinery 7,00,000 Less: Depreciation (1,7,000) Furniture & Fittings 62,00 Less: Depreciation (12,00) 7. Inventories Raw Material Finished goods 8. Trade receivables Debts outstanding for a period exceeding six months Other Debts 9. Cash and cash equivalents Cash at bank Amount 9,99,000 9,99,000 86,700 2,96,700 1,42,00 1,21,000 2,63,00 7,00 7,00 68,000 60,000 1,28,000 3,0,000,2,000 0,000 11,2,000 0,000 2,0,000 2,000 1,48,000 IPCC_34e_Accounts_Group-I_Company Final Accounts_ Assignment Solutions 6

7 with Scheduled Banks 2,4,000 with others (Perfect Bank Ltd.) 2,000 Cash in hand 2,47,000 30,000 2,77,000 Notes: Estimated amount of contract remaining to be executed on capital account and not provided for Rs.1,0,000.* PROBLEM NO. 9 Statement of Profit and Loss of International Hotels Ltd. for the year ended 31st March, 201 Notes Amount 11 1,83,200 3,300 1,86,00 I. Revenue from operations II. Other income (Discount received) III. Revenue (I + II) IV. Expenses: Cost of materials consumed Purchases of Inventory-in-Trade Changes in inventories of finished goods work-in-progress and Inventory-in-Trade Employee benefits expense Other operating expenses Selling and administrative expenses Finance costs Depreciation and amortization expense Other expenses expenses V. Profit (Loss) for the period (III - IV) ,060 4,800 (9,700) 29,80 18,000 14,200 12,000 21,31 8,000 1,64,2 22,24 Balance Sheet of International Hotels Ltd. as on 31 st March, 201 EQUITY AND LIABILITIES: 1. Shareholders' funds a. Share capital b. Reserves and Surplus 2. Non-current liabilities a. Long-term borrowings 3. Current liabilities a. Trade Payables b. Other current liabilities c. Short-term provisions ASSETS: 1. Non-current assets a. Fixed assets i. Tangible assets ii. Intangible assets (Goodwill) b. Non-current investments 2. Current assets a. Inventories b. Trade receivables c. Cash and cash equivalents Notes Amount IPCC_34e_Accounts_Group-I_Company Final Accounts_ Assignment Solutions ,00,000 1,74,74 42,000 13,280 94,000 18,24,02 9,14,98,00,000 2,72,300 38,900 19,260 78,80 18,24,02

8 Ph: /26 Notes to accounts: 1. Share Capital Equity share capital Authorized,000 Equity shares of Rs.0 each Issued & subscribed 8,000 Equity Shares of Rs.0 each Preference share capital Authorised,000 6% Preference shares of Rs.0 each Issued & subscribed,000 6% Preference shares of Rs.0 each 2. Reserves and Surplus Capital reserve General reserve Less: Amount used to pay dividend (30,2) Surplus (Profit & Loss A/c) 22,24 Add: Balance from previous year 41,00 Transfer from General Reserve 30,2 Appropriations Proposed Dividend (94,000) Profit (Loss) carried forward to Balance Sheet 3. Long-term borrowings Secured 6% Debentures Amount,00,000 8,00,000,00,000,00,000 13,00,000,000 1,69,74-0 1,74,74 4. Trade Payables 42,000. Other current liabilities Wages and Salaries Outstanding 1,280 Interest on debentures 12,000 13, Short-term provisions Proposed dividend Preference Dividend Equity Dividend 7. Tangible assets Freehold land & Buildings 8,0,000 Less: Depreciation (17,000) Furniture and Fittings 86,300 Less: Depreciation (4,31) 8. Inventories Wines, Cigarettes & Cigars, etc. Foodstuffs 30,000 64,000 94,000 8,33,000 81,98 9,14,98 22,00 16,400 38,900 IPCC_34e_Accounts_Group-I_Company Final Accounts_ Assignment Solutions 8

9 9. Cash and cash equivalents Cash at bank Cash in hand. Other expenses Preliminary Expenses 11. Revenue from operations Sale of products Wines, Cigarettes, Cigars etc. 68,400 Food 7,600 Sale of services Room Rent 48,000 Billiards,700 Miscellaneous Receipts 2,800 Transfer fees Cost of materials consumed Opening Inventory,260 Add: Purchases during the year 36,200 Less: Closing Inventory (16,400) 13. Purchases of Inventory-in-Trade Wines, Cigarettes etc. 14. Changes in inventories of finished goods work-in progress and Inventory-in- Trade Wines, Cigarettes etc. Opening Inventory 12,800 Less: Closing Inventory (22,00) 1. Employee benefits expense Wages and Salaries 28,300 Add: Wages and Salaries Outstanding 1, Other operating expenses Rent, Rates and Taxes Coal and Firewood Laundry Carriage and Cooliage Repairs 17. Selling and administrative expenses Advertising Sundry Expenses 18. Finance costs Interest on Debentures 19. Depreciation and amortization expense Land and Buildings 17,000 Furniture & Fittings 4,31 THE END 76,380 2,200 78,80 8,000 8,000 1,26,000 7,200 1,83,200,060 2,060 4,800 4,800 (9,700) (9,700) 29,80 29,80 8,900 3, ,20 18,000 8,360,840 14,200 12,000 12,000 21,31 21,31 IPCC_34e_Accounts_Group-I_Company Final Accounts_ Assignment Solutions 9