Chapter-3 Financial Statements of a Company

he Silver Ore Co. Ltd. was formed on April 1, 2005 with an authorised capital of Rs6,00,000 in shares of Rs 10 each. Of these 52,000 shares had been issued and subscribed but there were calls in arrear on 100 shares @ Rs 2.50. From the following trial balance as on March 31, 2006 prepare the trading and profit and loss account and the balance sheet:

(i) Depreciate plant and railways by 10%; furniture and building by 5%; (ii) Write off a third of the promotion expenses; (iii) Value of silver ore on March 31, 1969 Rs 15,000, The directors forfeited on December 20, 1968, 100 shares on which only Rs 7.50 had been paid.

The following is the trial balance of Alfa Ltd., for the year ended June 30, 2005

Prepare the Profit and Loss Account and Balance Sheet of the company after taking the following particulars into consideration:

a) The original cost of land and building plant and machinery and furniture and fittings was Rs 2,50,000, Rs 6,00,000 and Rs 60,000 respectively. Additions during the year were: Building Rs 50,000 and Plant Rs 20,000.

b) Depreciation is to be charged on plant and machinery and furniture and fitting at 10 per cent on original cost.

c) Of the sundry debtors, Rs 10,000 is outstanding for a period exceeding 6 months, Rs 5,000 are considered doubtful, while the others are considered good.

d) The directors are entitled to a commission at 1 percent of the net profits before charging such commission.

e) Stock on 30th June, 2005 is Rs 1,30,000.

f) Provide Rs 34,800 for income tax

The following is the trial balance on June 30, 2006 of the Modern Manufacturing Company Ltd.

Stock, on June 30, 2006 Rs 8,200. You are required to make out the trading account, and profit and loss account for the year ended June 30, 2006 and the balance sheet as on the date. You are also to make provision in respect of the following: (i) Depreciate machinery @ 10% per annum; (ii) Reserve 5% for discount on debtors; (iii) One month rent Rs 45 was due on 30th June; and (iv) Six month's insurance, included in general expenses, was unexpired at Rs 75.