Page 356 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Unit 14: Preparation of Final Accounts

Profit and Loss Appropriation Account Notes
Particulars Particulars
To Dividend Payable a/c 20,00,000 By Balance b/d 1,80,00,000
“ Corporate Dividend Tax a/c 2,00,000
“ Bonus Issue a/c 50,00,000
“ Balance c/d 1,08,00,000
(To be shown in Balance Sheet)
1,80,00,000 1,80,00,000
Balance Sheet of P Ltd. after
Bonus and Repayment of debentures
Liabilities (in lacs) Assets (in lacs)
Issued & Paid up Cap. Freehold Property 200
30 lacs equity shares 300 Stock in trade 120
of 10 each Sundry Debtors 100
Profit & Loss a/c 108 Cash in hand (1) 103.2
Securities Premium a/c 15.2
Sundry creditors 100
523.2 523.2

Working Notes:
(1) Cash and Bank A/C
Particulars Particulars
To Balance b/d 1,80,00,000 By Dividend Bank a/c 20,00,000
” Corporate Dividend Tax a/c 2,00,000
“ Share Application &
Allotment a/c 70,00,000 ” Debenture holders a/c 1,24,80,000
” Balance c/d 1,03,20,000
2,50,00,000 2,50,00,000

Illustration 8:
The following are the extracts from the trial balance of a Neha Beauty Products Limited on 31 st
March 2007:
Particulars Debit ( ) Credit ( )
Provision for tax 2005-06 20,000
Advance Tax paid for 2005-06 18,000
Advance Tax paid for 2006-07 10,000
Tax deducted at source 06-07 1,000
Profit and loss Account
Balance 2005-06 – 20,000

Assessment for the year 2005-06 was finalized during the year 2006-07. The total tax liability for
that year was fixed at 22,000. The net profit earned by the company during 2006-07 before tax
amounts to 40,000. The company is in 35% tax bracket.
Pass Journal Entries and show how the various items will appear in the Company’s Balance sheet.

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