Page 352 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Unit 14: Preparation of Final Accounts

Solution: Notes
Balance Sheet of Varun Ltd. 31st March, 2006
Liabilities ` Assets `
Authorized Share Capital 1,00,000 equity Fixed Assets
shares of ` 10 each 10,00,000 Goodwill 2,00,000
Issued Share Capital 1,00,000 equity 10,00,000 Land & Building 2,00,000
shares of `10 each.
Plant & Machinery 8,00,000
Subscribed Share Capital 1,00,000 equity 10,00,000 Investments
shares of ` 10 each fully Paid up
in shares of Raja Ltd. 2,00,000
Reserves and surplus
2,00,000 Current Assets, Loans and
General Reserves
Advances
Secured Loans
2,00,000 (a) Current Assets 1,00,000
12% Debentures
Stock in Trade 1,50,000
Unsecured Loans
1,00,000 Debtors
Bank Loan
(a) Loans & Advances 1,00,000
Current Liabilities and Provision
1,00,000 Bill Receivable
(A) Current liabilities creditors
Miscellaneous Expenditure
(B) Provision
55,000 Discount on Issue
Provision for taxation
1,00,000 of 12% debentures 5,000
Proposed Dividends
17,55,000 17,55,000

Illustration 5:
st
The following is the Profit and Loss Account of ABC Limited for the year ended 31 December,
2006, before providing for the following:
1. Directors’ Commission of 1 per cent on the Net Profit.
2. Managerial Commission of 10 per cent on Net Profit.
Particulars ` Particulars `
To Depreciation 30,000 By Gross Profit 5,00,000
To Compensatuion (Voluntary) 5,000 By Profit on Investment Sold
To Other Expenses 3,40,000 (Non-Trading) 20,000
To Net Profit 1,45,000
5,20,000 5,20,000

Notes Depreciation allowable as per rules amount to ` 25,000.
Redraft the profit and loss account after providing for the amounts of Managerial Commission
on net profit due in accordance with provisions of the Companies Act and show the Computation
of such amount of commission.

Solution:
1. Calculation of commission ` `
Net Profit as per profit & Loss Account 1,45,000
(+) Expenses not allowed

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