Illustration 1 :

The under mentioned balances appeared in the books of ABC Company Ltd. as on 31st March, 2007.
Particular
Rs.
Rs.
Share Capital (Authorized & Issued)
(60,000 shares of Rs. 10 each)
6,00,000
General Reserves
2,50,000
Unclaimed Dividend
6,526
Trade Creditors
36,858
Buildings
1,00,000
Purchases
5,00,903
Sales
9,83,947
Manufacturing expenses
3,59,000
Establishments
26,814
General Charges
31,078
Machinery
2,00,000
Motor vehicles
15,000
Furniture
5,000
Stocks
1,72,058
Book Debts
2,23,380
Investments (In shares of public Ltd. Company)
2,88,950
Unsecured Loans
71,000
Cash Balance
72,420
Directors fees
1,800
Interim Dividend
15,000
Interest
8,544
Profit & Loss A/c on 1-4-2006
16,848
Staff Provident fund
37,500
20,11,223 20,11,223
From the above balances and the following information prepare the Companys Balance Sheet and Profit &Loss A/c for the year
ended 31-3-2007.
(a) The closing stock valued at Rs. 1,48,680. (b) Provide for depreciation on Building Rs.4,000 ; Machinery Rs.4,000 ; Motor
Vehicles Rs.1,500 ; and Furniture Rs. 500. (c) Interest accrued on investment Rs. 2,750. (d) A Claim of Rs.2,500 for workmens
compensation is being disputed by the company. (e) Establishment expenses include Rs.6,000 paid to the manager who is entitled
to remuneration of Rs.10,000 per annum.
Illustration 2 :
The following balances were extracted from the books of E. Chandra Ltd. for the year ended 31st march, 2007
Particulars
Rs.
Prepare the Profit &
Loss Account of the
Buildings
6,00,000
Company for the year
ended March 31, 2007,
Furniture
60,000
and the Balance Sheet as
on the date after
Motor vehicles
60,000
the following
adjustments :
Equity shares of companies
4,00,000
(a) Provide 10%
depreciation per annum on
Stock in trade at cost
4,00,000
all fixed assets. (b)
Stock has been revalued
Sundry debtors, unsecured considered goods
2,80,000
as Rs.3,60,000. This has
not yet been considered.
Cash at bank
1,72,000
(c) Debts more than 6
months are Rs. 80,000.
Advance against construction of building
1,30,000
(d) Provide 50% for
taxation.
Illustration 3 :
Share Capital :
The following balances
appeared in the books of
10,000 Equity shares of Rs.100 each
10,00,000
Regent Company Ltd. on
March 31,2007.
Sundry creditors
3,50,000
Profit & Loss A/c (credit)
20,000
Gross profit
10,00,000
Dividend received on investment
10,000
Salaries and Wages
2,20,000
Trial Balances of Regent
Directors Fees
8,000
Co. Ltd. as on March 31,
2007.
Electricity chargesParticulars
Rs. 25,000Rs.
Rates, taxes and Insurance
10,000
Auditors Fees
15,000

Stock 1-4-2006
Purchases
Sales
Manufacturing Expenses
Salaries & Wages
General charges
Profit & Loss A/c
Directors Fees
Dividend for 2006
Buildings
Plant & Machinery
Furniture
Motor vehicles
Stores and spare parts
Bill receivable
Book Debts
Investments in shares of Rs. 10 each
Capital Share : shares of Rs. 10 each
Pension Fund
Dividend Equalization Fund
Taxation provision
Unclaimed dividend
Deposits
Trade creditors
Cash at Bank

51,000
8,10,000
11,10,000
1,80,000
26,400
11,000
30,000
400
18,000
1,01,000
70,400
10,200
40,800
30,000
45,000
1,14,000
8,000
1,44,000
46,000
20,000
17,000
2,000
6,000
2,48,000
1,06,600

16,22,800 16,22,800
From the above balances and following information, prepare the Companys Profit & Loss Account for the year ended 31-3-07 and
the Companies Balance Sheet as on that date :
(a) Stock on March 31st, 2007 ; Rs. 1,73,200.
(b) Outstanding Expenses : manufacturing expenses Rs. 45,000 and wages Rs.
3,000 (c) General charges prepaid Rs. 1,660. (d) Provide depreciation on building at 2% per annum, on plant and machinery at
10% per annum.
(e) The directors propose a dividend @ 20%.
(f) The taxation provision shown in the Trial Balance is after
payment of taxes for assessment upto March 31st,2006. The only liability for taxes is in respect of profit for 2007 for which a provision
of 60% on Net Profit is considered.
Illustration 4 :
The Golden Traders Limited, Nagpur, has an authorized and subscribed capital of Rs. 80,00,000 dividend into Equity Shares of
Rs.100 each. From the following balances which appear in the books of the company as on 31-3-2004. Prepare : (i) Profit & Loss
Account for the year ended 31-3-2004 and (ii) Balance Sheet as on that date, in the form prescribed under the Co. Act,1956.
Liabilities
Rs.
Assets
Rs.
Particulars
Dr. Rs. 8,00,000
Cr. Rs.
You are required
to consider the
Land & Building
3,40,000 Share Capital
Share
Capital
(Authorized
and
Issued
)
:
following
adjustments :
Plant & Machinery
6,60,000 Sundry creditors
1,20,000
Equity
shares
(15,000 shares)
1,50,000
(a) Stock as on 313-2004 :
Office
Equipment
40,000 Reserve fund
60,000
8% redeemable
preference shares 20,000
(40 shares)
4,000
Rs.1,80,000. (b)
Create reserve for
Preliminary Expenses
Profit % Loss Account
Share
Premium
2,500
bad debts at 5% on
sundry Debtors
Furniture
29,000 (1-04-2003)
35,400
Preference
share redemption
4,800 20,000
(c) Provide
depreciation :Plant
Calls in Arrears
6,000 Returns Outward
General
10,000
% Machinery @5% ,
Furniture @10%,
Cashreserves
in hand
2,000 Sales
12,30,000
Land5%
(cost)
office equipment
15%, Motor Vehicles
Govt. Bonds (tax
6% Debentures of Rs.20,000
Buildings
less
depreciation)
70,000 4,00,000
@20%.
(d)
Prepaid Insurance :
Free) (cost
(face
value
Rs.
100each
Furniture
(cost less depreciation) 36,000
2,000
Rs. 2,000.
40,000)
Motor
vehicles
(cost less depreciation)
3,500
(e) Reserves fund
to be increased by
Bills
receivable
58,000
Trading
AccountGross
Profit
80,000
Rs. 10,000.
(f)
Directors declared
Goodwill
36,000
Establishment
expenses
25,000
an interim dividend
for six months
Motor Vehicles
40,000
Rates,
taxesDebtors
and insurance
1,200
ending Sept. 30,
2003 at the rate of
Sundry
83,000
Commission
4,00
3%.
(g) Wages
outstanding : Rs.
Interim Dividend
18,000
Discount
received
500
3,000. (h)
Interest on
Repairs
3,000
Interest
on investment (tax free) 9,60,000 Bank Overdraft
Debentures for 6
months.
Purchases
50,000 800
Directors
fees
6,200
Illustration 5 :
Returns
inward
28,000
(secured)
Sundry
expenses
6,000
Trial Balance of
Glory Ltd. as on
Advertisement
10,000
Payment
auditors
400
31-3-2005.
Audit to
Fees
4,000
Sundry
debtors
and creditors
3,000
2,560
Carriage
Outwars
15,000
Profit
and
loss
account
(as
on
31-3-2004)
1,000
The following
additional
Wages
92,000
Interim
dividend
7,660
information is
available :
Insurance
20,000
Unpaid
dividend
200
(a) To preference
shares were
Stock
(1-04-2003)
1,90,000
Cash
in handExpenses
1,200
redeemed on 1st
October,2005, at a
General
17,000
Cash
at bank in current
19,500
premium of 20% but
no entries were
Debentures
Interest account
Security
1,000
passed for giving
effect thereto except
(Lessdeposits
tax at 30%)
8,400
Outstanding Expenses
payment standing to
the debit of
27,15,400
27,15,400 600
Investment in G.I. Notes
20,000
preference Shares
Redemption
Stocks at or below cost
35,300
Account.
Provision for taxation for the year ended 31-3-2004.
7,000
Income-tax paid under dispute for the year ended 31-3-2004
10,000
Advance payment of income tax
22,000
2,59,160
2,59,160

(b) Depreciation as per Income tax rules provided upto 31st March,2005 is as follows : Buildings Rs.21,000 ; Furniture Rs.2,000 ;motor
vehicles Rs. 6,000.
(c) payment to auditors include Rs.100 for taxation work in addition to audit fees.
(d) Market value of investment as on 31st March,2005 Rs.18,000.
(e) Interim dividend include dividend on equity shares Rs.75,000 and dividend on preference shares Rs.160.
(f) Sundry debtors include Rs.2,000 due for a period exceeding six months.
(g) All receivable and deposits are considered good.
(h) Income tax demand for the year ended 31st March,2004 for Rs.10,000 has not been provided for in full against which an appeal is
pending.
(i) Income tax to be provided at 50%.
(j) Directors have recommended payment of a further dividend on equity shares at Rs.0.50 per shares after approving Rs.3,000 to
General Reserve.
(k) Ignore previous years figures.
Prepare (a) Profit & Loss Account for the year ended 31st March,2005 and
(b) Balance Sheet on that date.
Illustration 6 :
The following Trial Balance has been drawn up from the books of RED CIRCLES Ltd. as on 31st March,2003.
Liability
Rs.
Assets
Rs.
Plant & machinery
Share Capital of Rs.10
Opening bal 15,000
each
1,00,000
Closing bal 6,000
21,000
Administrative Expenses
30,000 Gross Profit
69,600
Managing Directors
Remuneration 50,000
Selling expenses 9,500
Goodwill at cost
Directors fees
Trade investment
(at cost) In fully paid up
shares of Rs.10 each
Payment to auditors
Security Deposits
Calls-in-Arrear
Closing Stock (at cost)
Cash in Hand
Advance payment, of
Income-tax
Cash with Scheduled
Banks
Opening Balance of
furniture 4,000
Depreciation
Interest on loan

Creditors
6,000
10,000
1,30,000
600

Liabilities for expenses

Secured loan

20,000
8,000
1,00,000

Unsecured loan
1,05,000
5,000
5,000
2,000
20,000
3,000

Misc. receipts
Depreciation Provision :
Plant
8,900
Furniture
2,200

11,100

5,000
Sale proceed of old plant
20,000
1,100
7,500
3,75,200

3,000
Profit & Loss Account
(opening balance)
4,000
3,75,200

The following further particulars are available :

(a) Liabilities for expenses include the last quarters interest due on unsecured loan. (b) Payment to auditors include Rs.2,000 paid
for taxation work. (c) Market value or Trade Investment is Rs.85,000. (d) Provision for taxation is to be made at 40%.
(e) Secured loan is from the companys bankers obtained against charge of all the assets of the company.
(f) No adjustment has been made for the sale of old plant of Rs.3,000. It is ascertained that the original cost and depreciation provided
on this were Rs.8,000 and Rs.4,000 respectively.
(g) Unsecured loan is from a director carried forward from last years , interest payable at 6% p.a. falling due to quarterly basis at the
end of each quarter.
You are required to prepare the Profit & Loss A/c for the year ended 31st March,2003 and a Balance Sheet as on that date ignoring
previous years figures.
Illustration 7 :
The following is the trial balance of Bee Ltd. as on 31st March, 2007:
Particulars
Rs.
Particulars
Rs.

Stock as on 1-04-2006
Purchase
Wages
Carriage
Furniture
Salaries
Rent
Sundry Trade Expenses
Dividend paid
Debtors
Plant and Machinery
Cash at Bank
Patents
Bills receivable

75,000 Purchases Returns

10,000
2,45,000 Sales
3,40,000
30,000 Discount
3,000
950 Profit and Loss A/c
15,000
17,000 Share capital
1,00,000
7,500 Creditors
17,500
4,000 General reserves
15,500
7,050 Bills payable
7,000
9,000
27,500
29,000
46,200
4,800
5,000
5,08,000
5,08,000
Prepare the Profit & Loss Account for the year ended 31st March,2007 and a Balance Sheet as on that date after considering the
following adjustments :
(a) stock as on 31st March,2007 : Rs. 88,000. (b) Provision for income tax at 50%. (c) Depreciation plant and machinery at 15% ;
Furniture at 10% and patents at 5%. (d) On 31st March,2003 outstanding rent amounted to Rs.800 and salaries Rs. 900.
(e) The board recommends payment of a dividend @15% per annum. Transfer to general reserve Rs.1,500. (f) provide Rs.510 for
doubtful debts. (g) Provide for managerial remuneration at 10% on profit before tax and provision for doubtful debts.
(h) Provide corporate dividend tax @10%.
Illustration 8 :
The under mentioned balances appeared in the books of P. Co. Ltd. as on March 31st , 2006.
Particulars
Rs.
Stock
Share capital (authorized & issued)
60,000 shares of Rs.10 each
6,00,000
General Reserves
2,50,000
Uncluttered dividends
6,526
Trade creditors
36,858
Buildings
1,00,000
Purchases
5,00,903
Sale 9,83,947
Manufacturing expenses
3,59,000
Establishment
26,814
General charges
31,878
Machinery
2,00,000
Motor vehicles
15,000
Furniture
5,000
Stock
1,72,058
Book debts
2,23,380
Investment (in share of Rs.10each)
2,88,950
Bank loan(secured)
71,000
Cash balances
72,240
Directors fees
1,800
Interim dividend
15,000
Interest
8,544
Profit and loss account March 31,2005(Cr.)
16,848
Staff provident fund
37,500
From these balances and the following information prepare the companies balance sheet as on 31st March 2006, and its Profit and
Loss Account for the year ended on that date :
(a) The stock of wheat and flour on 31st March,2006 were valued at Rs.1,48,680.
(b) Provide Rs.10,000 for depreciation of block (fixed assets) and Rs.1,500 for the companies contribution to the staff provident fund.
(c) Interest accrued on investment amounted Rs.2,750.
(d) A claim of Rs.2,500 for workmens compensation is being disputed by the company.
(e) Provide Rs.4,000. For manager remuneration.
You may make the necessary assumptions for preparing the balance sheet and the profit and Loss Account.
Illustration 9 :
Prepare a Balance Sheet in Vertical form as at 31st March, 2002 form the following information of Rajesh Ltd. required under part 1B
of Schedule V1 of the Companies Act, 1956.
Rs.
Rs.
Term Loan
10,00,000 Sundry debtors
12,25,000
Sundry creditors
11,45,000 Miscellaneous expenses
58,000
Advances
3,72,000 Loans from debtors
2,00,000
Cash and Bank Balance
2,75,000 Provision for doubtful
Staff advances
55,000 debts
20,200
Provision for taxation
1,70,000 Stores
4,00,000
Securities premium
4,75,000 Fixed assets
51,55,000

Loose tools
Investments
Loss for the year

50,000
2,25,200
3,00,000

Finished goods
General reserves
Capital work in progress
Unsecured loans.

7,50,000
20,50,000
2,00,000
27,000

Additional Information :
(a) Share capital consist of :
(i) 3,000 equity shares of Rs.100 each fully paid up.
(ii) 10,000 10% redeemable preference share of Rs.100 each fully paid up.
(b) Term loans are secured.
(c) Depreciation on assets Rs.5,00,000.
(d) Scheduled need not be given. However, grouping should from part of the answers.
Illustration 10 :
Prepare a Balance Sheet in vertical form as at 31st December , 1988 from the following information of ABC Limited as required under
Part IB of Schedule VI of the Companies Act, 1956.
Particulars
Rs.
Term loan
10,00,000
Sundry creditors
11,45,000
Advances
3,72,000
Cash and bank balances
2,75,000
Staff advances
55,000
Provision for taxation
1,70,000
Share premium
4,75,000
Loose tools
50,000
Investments
2,25,200
Loss for the year
3,00,000
Sundry debtors
12,25,000
Miscellaneous expenses
58,000
Loan from debtors
2,00,000
Provision for doubtful debts
20,200
Stores
4,00,000
Fixed assets (WDV)
51,50,000
Finished goods
7,50,000
General reserves
20,50,000
Capital work in progress
2,00,000
Additional information :
(a) Share capital consist of :
(i) 30,000 equity share of Rs.100 each fully paid up.
(ii) 10,000-10% redeemable preference share of Rs.100 each fully paid up.
(b) Term loans are secured. (c) Depreciation on asset Rs. 5,00,000. (d) Schedules need not be given. However, grouping should
from part of the answers.
Illustration 11 :
Shri Ganesh Manufacturing Co. Ltd., has an authorized capital of Rs. 10,00,000 dividend into 8,000 equity shares of Rs.100 each
and 20,000 6% preference shares of Rs. 10 each. Following is the trial balance of the company as on 31st March, 2004 .
Trial Balance
Particulars
Rs.
Rs.
Share capital : Issued & subscribed :
(a) 6,000 Equity Shares of Rs.100 each fully paid up
-6,00,000
(b) 20,000 6% Pref. Shares of Rs.10 each called up
-2,00,000
Calls in Arrears (Preference , share)
1,000
-Debtors and creditors
3,65,200
1,85,600
Cash at bank
2,26,300
-Sales
-- 15,13,200
Purchases
12,64,300
-Plant and machinery
2,50,000
-Furniture
1,50,000
-Depreciation fund :
Plant and machinery
-25,000
Furniture
-15,000
Carriage Inward
16,000
-Factory wages
72,400
-Repairs
18,000
-Misc. Expenditures (1/2 Factory)
17,000
-Rent and taxes (3/5 Factory)
37,000
-Salaries
43,200
-Insurance (Factory)
1,200
-Profit and Loss Account (1-04-2003)
-5,000
Bad debts
5,600
-Reserves for doubtful debts
-13,800

Stock (1-04-2-003)
Raw materials
Work in progress
Finished goods
Reserve fund
6% debentures

28,300
16,500
83,200
---

---7,600
30,000

Prepare
(a) Manufacturing Account Trading Account and profit and Loss Account for the year ended 31st march,2004.
(b) A Balance sheet as on that date, after considering the following :
1. Closing stock valued at 31st March,2004 were as follows :
Raw material Rs.20,300
Work in progress Rs. 19,200
Finished goods Rs. 2,15,000
2. The insurance is paid for the year ending on 306-1985.
3. Provide depreciation on plant and machinery and on furniture at 10%.
4. Provide for taxation at 50% of net profit.
5. Transfer Rs. 20,000 to reserve fund and provide for preference dividend only.
6. Further bad debts amounted to Rs. 5,200.