Class 12 Accountancy TS Grewal Vol 3 Chapter 1 - Financial Statements Of A Company

TS Grewal Solutions Class 12 Accountancy Vol 3

Chapter 1 - Financial Statements Of A Company

TS Grewal Solutions for Class 12 Accountancy Chapter 1 – Financial Statements Of A Company is an important concept to be studied thoroughly by the students. Here, Check TS Grewal Accountancy Solutions for Class 12.

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Page No 1.59:

Question 1:

What are the major heads in the Equity and Liabilities part of the Balance Sheet as per Schedule III?

Answer:

The major heads in the Equities and Liabilities part of the Balance sheet are:

i. Shareholder’s Funds,

ii. Share Application Money Pending Allotment,

iii. Non- Current Liabilities and

iv. Current Liabilities

Balance Sheet as at_______
Particulars	Note No.	Amount ( ₹)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital
b. Reserves and Surplus
c. Money Received against Share Warrants
2. Share Application Money Pending Allotment
3. Non-Current Liabilities
a. Long-term Borrowings
b. Deferred Tax Liabilities (Net)
c. Other Long-term Liabilities
d. Long Term Provisions
4. Current Liabilities
a. Short-term Borrowings
b. Trade Payables
c. Other Current Liabilities
d. Short-term Provisions
Total

Page No 1.59:

Question 2:

Under which major head will the following be shown:

(i) Share Capital; and (ii) Money Received Against Share Warrants?

Answer:

Items	Major Head
Share Capital	Shareholder’s Funds
Money received against share warrants	Shareholder’s Funds

Page No 1.59:

Question 3:

List any five items that are shown under Reserves and Surplus.

Answer:

Items shown under Reserves and Surplus are:

i. Capital Reserve,

ii. Capital Redemption Reserve,

iii. Securities Premium Reserve,

iv. Debenture Redemption Reserve,

v. Revaluation Reserve etc.

Page No 1.59:

Question 4:

Under which sub-head will the following be classified or shown:
(i) Long-term Borrowings; (ii) Deferred Tax Liabilities (Net); and (iii) Long-term Provision?

Answer:

Items	Sub-head
Long-term Borrowings	Non-Current Liabilities
Deferred Tax Liabilities (Net)	Non-Current Liabilities
Long-Term Provisions	Non-Current Liabilities

Page No 1.59:

Question 5:

Name the items that are shown under Long-term Borrowings.

Answer:

Items shown under Long-term Borrowings are:

a. Debentures,

b. Bonds,

c. Terms Loans (both from Banks and from others),

d. Public Deposits,

e. Other Loans and Advances.

Page No 1.59:

Question 6:

A company has an opening credit balance in Surplus, i.e., Balance in Statement of Profit and Loss of `1,00,000. During the year, it earned a profit of `75,000. It decided to transfer `15,000 to Debentures Redemption Reserve (DRR) and also proposed to pay dividend of `25,000.

How will be the appropriations shown in the financial statements?

Answer:

Extract of Balance Sheet as at …..
Particulars	Note No.	Amount ( `)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital
b. Reserves and Surplus	1	1,50,000
2. Share Application Money Pending Allotment
3. Non-Current Liabilities
4. Current Liabilities
a. Short-term Provisions	4	25,000
Total

NOTES TO ACCOUNTS

Note No.	Particulars			Amount ( `)
1	Reserves and Surplus
	(a) Surplus, i.e. Balance in Statement of Profit and Loss	1,00,000
	Add: Profit for the year	75,000
	Less: Appropriations
	Transfer to Debenture Redemption Reserve		(15,000)
	Proposed Dividend		(25,000)	1,35,000
	(b) Debenture Redemption Reserve
	Transferred from Surplus i.e. Balance in Statement of Profit and Loss			15,000
	Total (a + b) [to be Shown in Balance Sheet against Reserves and Surplus]			1,50,000
4	Short-term Provisions
	Proposed Dividend			25,000

Page No 1.70:

Question 7:

State giving reason whether Trade Receivables are classified as Current Assets or Non-current Assets in the Balance Sheet of a Company as per Schedule III of the Companies Act, 2013 in the following cases.


Case	Operating Cycle Period (Months)	Expected Realisation Period (Months)

1	10	11
2	10	12
3	10	13
4	14	13
5	15	16

Answer:

Case	As Current Assets or Non- Current Assets	Reason
1.	Current Assets	Expected receipt is more than operating cycle but receivable within 12 months.
2.	Current Assets	Expected receipt is more than operating cycle but receivable within 12 months.
3.	Non- Current Assets	Expected receipt is more than operating cycle and receivable after 12 months.
4.	Current Assets	Expected receipt is less than operating cycle.
5.	Non- Current Assets	Expected receipt is more than operating cycle and receivable after 12 months.

Page No 1.70:

Question 8:

State giving reason whether Trade Payables are classified as Current Liabilities or Non-current Liabilities in the Calance Sheet of a Company as per Schedule III of the Companies Act, 2013 in the following cases:

Case	Operating Cycle Period (Months)	Expected Payment Period (Months
1	10	11
2	10	12
3	10	13
4	14	13
5	15	16

Answer:

Case	As Current Liabilities or Non- Current Liabilities	Reason
1.	Current Liabilities	Expected payment is more than operating cycle but payable within 12 months
2.	Current Liabilities	Expected payment is more than operating cycle but payable within 12 months
3.	Non- Current Liabilities	Expected payment is more than operating cycle and payable after 12 months
4.	Current Liabilities	Expected payment is less than operating cycle
5.	Non- Current Liabilities	Expected payment is more than operating cycle and payable after 12 months

Page No 1.61:

Question 9:

Under which head and how are the following items shown in the Balance Sheet of a company under Schedule III:
(i) Calls-in-Arrears; (ii) Share Application Money Pending Allotment; (iii) Unpaid Dividend; and (iv) Dividend not paid on Cumulative Preference Shares?

Answer:

Items	Head	Disclosure
Calls-in-Arrears	Shareholder’s Funds	It is shown as a deduction from Subscribed Capital shown as ‘Subscribed but not fully paid’ under Shareholder’s Funds
Share Application Money Pending Allotment	Share Application Money Pending Allotment	It is shown as a separate line item
Unpaid Dividend	Current Liabilities	It is shown as ‘Other Current Liability’ under Current Liabilities
Dividend not paid on Cumulative Preference Shares	Contingent Liabilities and Commitments	It is shown as Contingent Liabilities and Commitments in Notes to Accounts

Page No 1.61:

Question 10:

Under which main head and sub-head of Equity and Liabilities part of the Balance Sheet are the following items classified or shown:

(i) Bonds;	(ii) Debentures
(iii) Public Deposits;	(iv) Capital Redemption Reserve;
(v) Forfeited Shares Account:	(vi) Sundry Creditors; and
(vii) Interest Accrued but Not Due on Debentures?

Answer:

Items	Main head	Sub-head
Bonds	Non-Current Liabilities	Long Term Borrowings
Debentures	Non-Current Liabilities	Long Term Borrowings
Deposits	Non-Current Liabilities	Long Term Borrowings
Capital redemption Reserve	Shareholder’s Funds	Reserves and Surplus
Share Forfeiture Account	Shareholder’s Funds	Subscribed Capital under Share Capital
Sundry Creditors	Current Liabilities	Trade Payables
Interest Accrued but not due on Debentures	Current Liabilities	Other Current Liabilities

Page No 1.61:

Question 11:

State any two items that are included in the following major heads under which liabilities of a company are shown: (i) Reserves and Surplus; (ii) Long-term Borrowings; (iii) Short-term Borrowings; (iv) Other Current Liabilities.

Answer:

Major head	Items
Reserves and Surplus	Capital Reserve, Revaluation Reserve
Long-term Borrowings	Debentures, Term Loans from Bank and Others
Short-term Borrowings	Cash credit from bank, Loans repayable on demand
Other Current Liabilities	Income received in advance, Unpaid Dividends

Page No 1.61:

Question 12:

Classify the following items under major head and sub-head (if any) in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013: (i) Capital Work-in-Progress: (ii) Provision for Warranties; (iii) Income received in Advance; and (iv) Capital Advances

Answer:

Item	Major Head	Sub-Head
Capital Work-in-Progress	Non-Current Assets	Fixed Assets- Capital Work-in-Progress
Provision for Warranties	Non-Current Liabilities	Long Term Provisions
Income Received in Advance	Current Liabilities	Other Current Liabilities
Capital Advances	Non-Current Assets	Long Term Loans & Advances

Page No 1.62:

Question 13. Under which major heads and sub-heads will the following items be placed in the Balance Sheet of the company as per Schedule 11, Part I of the Companies Act, 2013?

(i) Debentures with maturity period in current financial year

(ii) Securities Premium Reserve

(ii) Provident Fund

(CBSE Sample Paper 2019)

Answer:

S. No.	Item	Major Head	Sub-head
(i)	Debentures with maturity period in current financial year	Current Liabilities	Other Current Liabilities
(ii)	Securities Premium Reserve	Shareholders’ Funds	Reserves and Surplus
(iii)	Provident Fund	Non-current Liabilities	Long-term Provisions

Page No 1.62:

Question 14:

Under which major head and sub-head of the Assets part of the Balance Sheet will the following be shown:

(i) Intangible Assets; (ii) Intangible Assets under Development; (iii) Investments (more than 12 months); (iv) Deferred Tax Assets (Net); (v) Stores and Spares; and (vi) Loose Tools?

Answer:

Items	Main head	Sub-head
Intangible Assets	Non-Current Assets	Fixed Assets
Intangible Assets under development	Non-Current Assets	Fixed Assets
Investments (more than 12 months)	Non-Current Assets	Non-Current Investments
Deferred Tax Assets (Net)	Non-Current Assets	Deferred Tax Assets (Net)
Stores and Spares	Current Assets	Inventories
Loose Tools	Current Assets	Inventories

Page No 1.62:

Question 15:

Under which heads the following items are classified or shown on the Assets part of the Balance Sheet of a copany: (i) Loose Tools; (ii) Bills Receivable; (iii) Sundry Debtors: and (iv) Advances Recoverable in Cash?

Answer:

Items	Main head	Sub-head
Loose Tools	Current Assets	Inventories
Bills Receivable	Current Assets	Trade Receivables
Sundry Debtors	Current Assets	Trade Receivables
Advance Recoverable in Cash	Current Assets	Short-term Loans and Advances

Page No 1.63:

Question 16:

Under which heads the following items on the Assets part of the Balance Sheet of a company will be presented?

(i) Sundry Debtors;	(ii) Patents and Trademarks;	(iii) Shares in Quoted Companies:
(iv) Advances recoverable in cash;	(v) Prepaid Insurance; and	(vi) Work-in-Progress (Machinery)?

Answer:

Items	Main head	Sub-head
Sundry Debtors	Current Assets	Trade Receivables
Patents and Trade Marks	Non-Current Assets	Fixed Assets (Intangible Assets)
Shares in Quoted Companies	Non-Current Assets	Non-Current Investments
Advance Recoverable in Cash	Current Assets	Short-term Loans and Advances
Prepaid Insurance	Current Assets	Other Current Assets
Work-in-Progress (Machinery)	Non-Current Assets	Fixed Assets (Capital Work-in-progress)

Page No 1.63:

Question 17:

Under which of the major heads will the following items be shown while preparing Balance Sheet of a company, as per Schedule III of the Companies Act, 2013:

(i) Unamortised Loss on Issue of Debentures (To be written off after 12 months from the date of Balance Sheet);
(ii) 10% Debentures;	(iii) Stock-in-Trade;	(iv) Cash at Bank;
(v) Bills Receivable;	(vi) Goodwill;	(vii) Loose Tools;
(viii) Truck;	(ix) Provision for Tax; and	(x) Sundry Creditors?

Answer:

ITEMS	HEAD	SUB-HEAD
Unamortised Loss on Issue of Debentures (To be written off after 12 months from date of Balance sheet)	Non-Current Assets	Other Non-Current Assets
10% Debentures	Non-Current Liabilities	Long-term Borrowings
Stock-in-Trade	Current Assets	Inventories
Cash at Bank	Current Assets	Cash and Cash equivalents
Bills Receivable	Current Assets	Trade Receivables
Goodwill	Non-Current Assets	Fixed Assets (Intangible Assets)
Loose Tools	Current Assets	Inventories
Truck	Non-Current Assets	Fixed Assets (Tangible Assets)
Provision for Tax	Current Liabilities	Short term Provisions
Sundry Creditors	Current Liabilities	Trade Payables

Page No 1.63:

Question 18:

Under which heads will the following items be shown in the Balance Sheet of a Company

(i) Bank Balance;	(ii) Investments (Long-term);	(iii) Outstanding Salary;
(iv) Authorised Capital;	(v) Bills Payable;
(vi) Unclaimed Dividents;	(vii) Shares Option Outstanding Account;
(viii) General Reserve; and	(ix) Subsidy Reserve?

Answer:

S. No.	Items	Main Head	Sub-Head
1	Bank Balance	Current Assets	Cash and Cash Equivalents
2	Investments (Long-term)	Non-Current Assets	Non-Current Investments
3	Outstanding Salary	Current Liabilities	Other Current Liabilities
4	Authorised Capital	Shareholder’s Fund	Share Capital
5	Bills Payable	Current Liabilities	Trade Payables
6	Unclaimed Dividends	Current Liabilities	Other Current Liabilities
7	Share Option Outstanding Account	Shareholders’ Funds	Reserves and Surplus
8	General Reserve	Shareholders’ Funds	Reserves and Surplus
9	Subsidy Reserve	Shareholders’ Funds	Reserves and Surplus

Page No 1.64:

Question 19:

Under which heads the following items are shown in the Balance Sheet of a company:

(i) Calls-in-Arrears;	(ii) Commission Received in Advance;
(iii) Debentures;	(iv) Stores and Spare Parts;
(v) Land and Building;	(vi) Forfeited Shares Account?

Answer:

S. No.	Items	Main Head	Sub-Head
1	Calls-in-Arrears	Shareholder’s Funds	Share Capital (i.e. as a deduction from subscribed share capital)
2	Commission Received in Advance	Current Liabilities	Other Current Liabilities
3	Debentures	Non-Current Liabilities	Long-term Borrowings
4	Stores and Spare Parts	Current Assets	Inventories
5	Land and Building	Non-Current Assets	Fixed Assets (Tangible Assets)
6	Forfeited Shares Account	Shareholder’s Funds	Share Capital (i.e. as an addition to subscribed share capital)

Page No 1.64:

Question 20: Under which major heads and sub-heads will the following items be presented in the Balance Sheet of the company as per Schedule Il, Part I of the Companies Act, 2013?

(i) Bank Overdraft

(ii) Subsidy Reserve

(iii) Capital Redemption Reserve

(iv) Mining Rights

(v) Patents

(vi) Debit balance in the Statement of Profit and Loss

(vii) Debenture Redemption Reserve

(vii) Provision for Taxation

(CBSE 2019)

Answer:

S. No.	Item	Major Head	Sub-head
(i)	Bank Overdraft	Current Liabilities	Short-term Borrowings
(ii)	Subsidy Reserve	Shareholders’ Funds	Reserves and Surplus
(iii)	Capital Redemption Reserve	Shareholders’ Funds	Reserves and Surplus
(iv)	Mining Rights	Non-current Assets	Property, Plant and Equipment (Fixed Assets)-Intangibles Assets
(v)	Patents	Non-current Assets	Property, Plant and Equipment (Fixed Assets)-Intangibles Assets
(vi)	Debit Balance in the Statement of Profit and Loss	Shareholders’ Funds	Reserves and Surplus (as negative amount)
(vii)	Debenture Redemption Reserve	Shareholders’ Funds	Reserves and Surplus
(vii)	Provision for Taxation	Current Liabilities	Short-term Provisions

Page No 1.65:

Question 21:

Under which heads the following are shown in a company’s Balance Sheet:

(i) Public Deposits;	(ii) Office Furniture;
(iii) Prepaid Rent;	(iv) Outstanding Salaries;
(v) Computer Software;	(vi) Interest Accrued on Investment?

Answer:

S. No.	Items	Main Head	Sub-Head
1	Public Deposits	Non-Current Liabilities	Long-term Borrowings
2	Office Furniture	Non-Current Assets	Fixed Assets (Tangible Assets)
3	Prepaid Rent	Current Assets	Other Current Assets
4	Outstanding Salaries	Current Liabilities	Other Current Liabilities
5	Computer Software	Non-Current Assets	Fixed Assets (Intangible Assets)
6	Interest Accrued on Investment	Current Assets	Other Current Assets

Page No 1.65:

Question 22:

Under which major headings and sub-headings the following items will be shown in the Balance Sheet of a company as per schedule III of Companies Act, 2013?
(i) Provision for Employee Benefits.
(ii) Calls-in-Advance.

Answer:

S.No.	Item	Major Head	Sub-head
i)	Provision for Employee Benefit	Non-current Liabilities	Long term Provisions
ii)	Calls-in-Advance	Current Liabilities	Other Current Liabilities

Page No 1.65:

Question 23: Under which sub-headings will the following items be placed in the Balance Sheet of a company as per Schedule II, Part I of the Companies Act, 2013?

(i) Prepaid Expenses

(ii) Loose Tools

(iii) Loans Repayable on Demand

(iv) Provision for Employees Benefit

(v) Negative Balance in the Statement of Profit and Loss

(vi) Bank Overdraft

(vii) Bills Receivables

(viii) Trade Marks

(Delhi 2019)

Answer:

S. No.	Item	Sub-head
(i)	Prepaid Expenses	Other Current Assets
(i)	Loose Tools	Inventories
(ii)	Loans repayable on Demand	Short-term Borrowings
(iv)	Provision for Employees Benefit	Long-term Provisions
(v)	Negative balance in Statement of Profit and Loss	Reserves and Surplus (as negative amount)
(vi)	Bank Overdraft	Short-term Borrowings
(vi)	Bills Receivables	Trade Receivables
(vii)	Trade Marks	Property, Plant and Equipment (Fixed Assets)Intangible Assets

Page No 1.65:

Question 24:

How are the following items shown while preparing Balance Sheet of a company:
(i) Surplus, i.e., Balance in Statement of Profit and Loss (Dr.);
(ii) Interest accrued and due on Debentures;
(iii) Computer Software under development;
(iv) Interest accrued on Investment?

Answer:

ITEMS	MAJOR HEAD	SUB-HEAD
Surplus, i.e. Balance in Statement of Profit and Loss (Dr.)	Shareholder’s Funds	Reserves and Surplus (as negative figure)
Interest accrued and due on debentures	Current Liabilities	Other Current Liabilities
Computer Software under development	Non-current Assets	Fixed Assets (Intangible Assets under development)
Interest accrued on Investments	Current Assets	Other Current Assets

Page No 1.66:

Question 25:

Hero Ltd. has raised following long-term loans on 1st April, 2018:

10,000; 10% Debentures of ₹ 100 each redeemable in four equal yearly	₹
installments beginning 1st July, 2019	10,00,000
11% Bank Loan from SBI repayable after 5 years	20,00,000
Interest on Debentures and Bank Loan has not yet been paid.

How will be the above items shown in the Balance Sheet of the company as at 31st March, 2019?

Answer:

Extract of Balance Sheet as at March 31, 2019
Particulars			Note No.	Amount ( ₹)
2. Non-Current Liabilities
Long-term Borrowings
11% Loan from SBI	20,00,000
7,500, 10% Debentures of ₹ 100 each	7,50,000			27,50,000
3. Current Liabilities
Other Current Liabilities
Current Maturity of Long-term Debts (2,500 Debentures of ₹ 100 each maturing within 12 months)		2,50,000
Interest accrued and Due on Debentures		1,00,000
Interest accrued and Due on Loan		2,20,000		5,70,000

Total				33,20,000

Page No 1.66:

Question 26: Under which heads and sub-heads will be the following items shown in the Balance Sheet of a Company as per Schedule l, Part I of the Companies Act, 2013?

(i) Securities Premium Reserve

(ii) Interest accrued and due on secured loans

(iii) Cash and Bank balance

(iv) Interest accrued but not due

(v) Building

(vi) Mining Rights

(vii) Sundry Debtors

(vii) Sundry Creditors

(ix) Premium on Redemption of Debentures

(x) Provision for Tax

Answer:

S. No.	Major Head	Sub-head
(i)	Shareholders’ Funds	Reserves and Surplus
(ii)	Current Liabilities	Other Current Liabilities
(ii)	Current Assets	Cash and Cash Equivalents
(iv)	Current Liabilities	Other Current Liabilities
(v)	Non-current Assets	Property, Plant and Equipment (Fixed Assets)-Tangible Assets
(vi)	Non-current	Assets Property, Plant and Equipment (Fixed Assets)-Intangible Assets
(vii)	Current Assets	Trade Receivables
(vii)	Current Liabilities	Trade Payables
(ix)	Non-current Liabilities	Other Long-term Liabilities
(x)	Current Liabilities	Short-term Provisions

Page No 1.67:

Question 27:

Prepare Balance Sheet of the Company as per Schedule III of the Companies Act, 2013:	₹
10% Debentures of ₹ 100 each	1,90,000
Stock-in-Trade (inventories)	40,000
Goodwill	20,000
Provision for Tax	60,000
Totalling of Balance Sheet is not required

Answer:

Balance Sheet as at …
Particulars	Note No.	Amount ( ₹)
I. Equity and Liabilities
1. Shareholders’ Funds		–
2. Non-Current Liabilities
Long-term Borrowings	1	1,90,000
3. Current Liabilities
Short-term Provisions	2	6,000
Total
II Assets
1. Non-Current Assets
Intangible (Fixed Assets)	3	20,000
2. Current Assets
a. Inventories	4	40,000
Total

NOTES TO ACCOUNTS
Note No.	Particulars	Amount ( ₹)
1	Long-term Borrowings
	10% Debentures	1,90,000

2	Short-term Provisions
	Provision for Tax	6,000

3	Intangible (Fixed Assets)
	Goodwill	20,000

4	Inventories
	Stock-in-Trade	40,000

Page No 1.67:

Question 28:

Prepare Balance Sheet of VT Ltd. as at 31st March 2019, from the following information as per Schedule III, Part I of the Companies Act, 2013:

	₹		₹
General Reserve	3,000	Fixed Assets: Tangible Assets (Cost)	9,000
8% Debentures	3,000	Other Current Liabilities	2,500
Surplus, i.e., Balance in Statement of Profit and Loss (Credit)	1,200	Share Capital	5,000
Depreciation of Fixed Assets	700	Other Current Assets	6,400

Answer:

Balance Sheet as at March 31, 2019
Particulars	Note No.	Amount ( ₹)
I Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	5,000
b. Reserves and Surplus	2	4,200
2. Non-Current Liabilities
Long-term Borrowings	3	3,000
3. Current Liabilities
Other Current Liabilities		2,500
Total		14,700
II Assets
1. Non-Current Assets
Fixed Assets (Tangible Assets)	4	8,300
2. Current Assets
Other Current Assets		6,400
Total		14,700

NOTES TO ACCOUNTS
Note No.	Particulars		Amount ( ₹)
1	Share Capital
	Share Capital		5,000

2	Reserves and Surplus
	General Reserve		3,000
	Balance in Statement of Profit and Loss (Credit)		1,200
			4,200

3	Long-term Borrowings
	8% Debentures		3,000

4	Fixed Assets
	Tangible Assets (Cost)	9,000
	Depreciation	(700)	8,300

Page No 1.67:

Question 29:

From the following information extracted from the books of Howrach Ltd., prepare Balance Sheet of the company as at 31st March, 2019 as per Schedule III of the Companies Act, 2013:

	( ₹ in ‘000)		( ₹ in ‘000)
Long-term Borrowings	1,000	Fixed Assets (Tangible)	1,600
Trade Payable	60	Inventories	40
Share Capital	800	Trade Receivables	160
Reserves and Surplus	180	Cash and Cash Equivalents	240

Answer:

Balance Sheet of Howrach Ltd. as at March 31, 2019
Particulars	Note No.	Amount ( ₹ in ‘000)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital		800
b. Reserves and Surplus		180
2. Non-Current Liabilities
Long-term Borrowings		1,000
3. Current Liabilities
Trade Payables		60
Total		2,040
II. Assets
1. Non-Current Assets
Fixed Assets (Tangible Assets)		1,600
2. Current Assets
Inventories		40
Trade Receivables		160
Cash and Cash Equivalents		240
Total		2,040

Page No 1.67:

Question 30:

Prepare Balance Sheet of HP Ltd. as at 31st March, 2019 from the following information:

	₹		₹
Equity Share Capital	20,00,000	Surplus, i.e., Balance in Statement of Profit and Loss (Cr.)	3,00,000
12% Preference Share Capital	10,00,000	Stock	6,00,000
Fixed Assets (At cost)	46,60,000	Sundry Debtors	8,00,000
Accumulated Depreciation	16,60,000	Cash	1,50,000
Investments	4,00,000	Loans and Advances	50,000
Current Liabilities	8,00,000	Provision for Taxation	2,00,000
12% Debentures	6,00,000	Workmen Compensation Reserve	1,00,000

Answer:

Balance Sheet of HP Ltd. as at March 31, 2019
Particulars			Note No.	Amount ( ₹)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital			1	30,00,000
b. Reserves and Surplus			2	4,00,000
2. Non-Current Liabilities
a. Long-term Borrowings			3	6,00,000
3. Current Liabilities
a. Other Current Liabilities			4	8,00,000
b. Short-term Provisions			5	2,00,000
Total				50,00,000
II Assets
1. Non-Current Assets
a. Fixed Assets
i) Tangible Assets			6	30,00,000
b. Non-Current Investments			7	4,00,000
2. Current Assets
a. Inventories			8	6,00,000
b. Trade Receivables			9	8,00,000
c. Cash and Cash Equivalents			10	1,50,000
d. Short-term Loans and Advances			11	50,000
Total				50,00,000
NOTES TO ACCOUNTS
Note No.	Particulars			Amount ( ₹)
1	Share Capital
	Equity Share Capital			20,00,000
	12% Preference Share Capital			10,00,000
				30,00,000
2	Reserves and Surplus
	Workmen Compensation Reserve			1,00,000
	Balance in Statement of Profit and Loss (Credit)			3,00,000
				4,00,000

3	Long-term Borrowings
	12% Debentures			6,00,000

4	Other Current Liabilities
	Current Liabilities			8,00,000

5	Short-term Provisions
	Provision for Taxation			2,00,000

6	Tangible Assets
	Fixed Assets (Cost)	46,60,000
	Depreciation	(16,60,000)		30,00,000

7	Non-Current Investments
	Investments			4,00,000

8	Inventories
	Stock			6,00,000

9	Trade Receivables
	Sundry Debtors			8,00,000

10	Cash and Cash Equivalents
	Cash			1,50,000

11	Short-term Loans and Advances
	Loans and Advances			50,000

Page No 1.67:

Question 31:

Under which head following revenue items of a non-financial company will be classified or shown:
(i) Sales; (ii) Revenue from Services Rendered; (iii) Sale of Scrap; (iv) Interest Earned on Loans; and (v) Gain (profit) on Sale of Investments?

Answer:

ITEMS	HEAD
Sales	Revenue from Operations
Revenue from services rendered	Revenue from Operations
Sale of scrap	Revenue from Operations
Interest earned or Loans	Other Income
Profit on Sale of Investment	Other Income

Page No 1.68:

Question 32:

Under which head following revenue items of a financial company will be classified or shown:
(i) Gain (Profit) on Sale of Building;

(ii) Revenue from Project Consultancy Rendered;

(iii) Sale of Scrap;

(iv) Interest earned on Loans; and

(v) Gain (Profit) on sale of Investments?

Answer:

ITEMS	HEAD
Profit on Sale of Building	Other Income
Revenue from Project Consultancy Rendered	Other Income
Sale of scrap	Other Income
Interest earned or Loans	Revenue from Operations
Profit on Sale of Investment	Revenue from Operations

Page No 1.68:

Question 33:

Calculate Cost of Materials Consumed from the following:
Opening Inventory of Materials ₹5,00,000; Purchase of Materials ₹25,00,000; and Closing Inventory of Materials ₹4,00,000.

Answer:

Cost of material consumed	=	Opening Inventory of Materials + Purchase of Materials
		– Closing Inventory of Materials
	=	5,00,000+25,00,000-400,000
	=	26,00,000
Cost of material consumed		26,00,000

Page No 1.68:

Question 34:

Calculate Cost of Materials Consumed from the following:
Opening Inventory of Materials ₹3,50,000; Finished Goods ₹75,000; Stock-in-Trade ₹2,00,000; Closing Inventory of: Materials ₹3,25,000; Finished Goods ₹85,000; Stock-in-Trade ₹1,50,000; Purchases during the year: Raw Material ₹17,50,000; Stock-in-Trade ₹9,00,000.

Answer:

Cost of material consumed	=	Opening Inventory of Materials + Purchase of Materials
		– Closing Inventory of Materials
	=	3,50,000+17,50,000-3,25,000
	=	17,75,000
Cost of material consumed	=	17,75,000

Note: Opening Inventory of Finished Goods and Closing Inventory of Finished Goods will not be considered as these are shown under Change in Inventory of Finished Goods. Also, Opening, Closing and Purchases of Stock-in-Trade are not considered as they are not part of cost of materials consumed.

Page No 1.68:

Question 35:

From the following information of Hospitality Ltd. for the year ended 31st March, 2018, calculate amount that will be shown in the Note to Accounts on Changes in inventiories of Finished Goods, WIP and stock-in-Trade:


Particulars	Opening Inventory ( ₹)	Closing inventory( ₹)
Finished Goods	5,00,000	5,50,000
Work-in-Progress	4,50,000	4,25,000
Stock-in-Trade	6,50,000	6,00,000

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount ( ₹)
	Change in Inventories of Finished Goods, WIP and Stock-in-Trade
(a)	Finished Goods
	Opening Inventory	5,00,000
	Less: Closing Inventory	5,50,000	(50,000)
			(50,000)
(b)	Work-in-Progress
	Opening Inventory	4,50,000
	Less: Closing Inventory	4,25,000	25,000
			25,000
(c)	Stock-in-Trade
	Opening Inventory	6,50,000
	Less: Closing Inventory	6,00,000	50,000
			50,000
	Net Change (a+b+c)		*25,000*

₹ 25,000 will be shown in the Statement of Profit and Loss against the Change in Inventories of Finished Goods, Work-in-Progress and Stock-in-Trade.

Page No 1.68:

Question 36:

From the following information compute the amount to be shown in Note to Accounts on Employees Benefit Expenses: Wages ₹ 5,40,000; Salaries ₹ 7,20,000; bonus ₹ 1,05,000; Staff Welfare Expenses ₹ 60,000 and Business Promotion Expenses ₹ 50,000.

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount ( ₹)
	Employees Benefit Expenses

	Wages	5,40,000
	Salaries	7,20,000
	Bonus	1,05,000
	Staff Welfare Expenses	60,000	14,25,000

	Amount to be shown in the Statement of Profit and Loss		14,25,000

*Amount spent on promotion of business is not included in Employees Benefit Expenses.

Page No 1.68:

Question 37:

From the following information, prepare Note to Accounts on Employees Benefit Expenses:
Wages ₹ 2,70,000; Salaries ₹ 3,60,000; Staff Welfare Expenses 60,000; Printing and Stationery Expenses ₹ 20,000 and Business Promotion Expenses ₹ 50,000.

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount ( ₹)
	Employees Benefit Expenses

	Wages	2,70,000
	Salaries	3,60,000
	Staff Welfare Expenses	60,000	6,90,000

	Amount to be shown in the Statement of Profit and Loss		6,90,000

*Amount spent on promotion of business and printing & Stationary expenses are not included in Employees Benefit Expenses.

Page No 1.68:

Question 38:

From the following information of Best Marketing Ltd. for the year ended 31st March, 2019 prepare Note to Accounts on Depreciation and Amortisation Expenses:
Depreciation on: Building ₹ 15,500; Plant and Machinery ₹ 25,000; Computers ₹ 60,000; Goodwill written off ₹ 7,500; Patents written off ₹ 12,500.

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount ( ₹)
	Depreciation and *Amortisation* Expenses
	Depreciation
	Building	15,500
	Plant and Machinery	25,000
	Computers	60,000	1,00,500
	Amortisation
	Goodwill written off	7,500
	Patents written off	12,500	20,000
			1,20,500
	Amount to be shown in the Statement of Profit and Loss		1,20,500

TS Grewal Solutions Class 12 Accountancy Vol 3

Chapter 1 - Financial Statements Of A Company

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