Page 365 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Particulars ` `
Stock 1st July 2005 85,000
Land & Buildings 3,00,000 –
Plant & Machinery 4,50,000 –
Accounting for Companies-I
Furniture & Fittings 40,000 –
Goodwill 60,000 –
Sundry Debtors 60,000 –
Notes Bills Receivable 26,000 –
Investments (5% Govt. Securities) 30,000 –
Cash in hand 2,000 –
Cash at Bank 55,000 –
Sundry Creditors – 40,000
Preliminary Expenses 29,000 –
Bills Payable – 20,000
General Reserves – 2.00,000
Profit & Loss Account Balance on 1.7.05 – 90,000
Purchases 4,00,000 –
Sales – 6,25,000
Returns 10,000 15,000
Wages 47,000 –
Salaries 55,000 –
Rent, Rates & Taxes 9,000 –
Carriage inwards 6,500 –
Law Charges 2,500 –
Trade Expenses 23,000 –
Equity Share Capital – 50,00,000
8% Preference Share Capital – 2,00,000
16,90,000 16,90,000

Prepare the Profit and Loss A/c and Balance Sheet of the Co. after taking the following
particulars into consideration:
1. The authorized capital of the company ` 10,00,000 is divided into 50,000 equity
shares of ` 10 each and 5,000, 8% preference shares of ` 100 each.

2. The original cost of Land & Building, Plant & Machinery, Furniture & Fittings were
` 2,50,000, ` 6,00,000 and ` 60,000 respectively. Additions during the year were
Building ` 50,000 and Plant ` 20, 000.
3. Depreciation is to be charged on Plant & Machinery and Furniture & Fittings @ 10%
on original cost.

4. Out of Sundry Debtors, ` 10,000 are outstanding for a period exceeding 6 Months,
` 5,000 are considered doubtful, while the others are considered Good.
5. The Directors are entitled to a commission @ 10% of the net profit before charging
such commission.
6. Stock on 30 June, 2006 is ` 1,30,000.
th
7. Provide ` 34,800 for Income Tax.

Hint:
(a) Director’s Commission 6,100
(b) Net Profit 54,900
(c) Carry Forward 1,10,100

(d) Total of Balance Sheet 11,11,000

358 LOVELY PROFESSIONAL UNIVERSITY