Ram Kumar Kakani

Financial Accounting

Academic Year 2012

Rohan Software Limited: Solution to the Class Illustration

Assets
Liabilities
Date
Cash
Receivables
Supplies
Computer
= Trade Payables
Interest Payable
Rohan Software Limited: Accounting Equation for each transaction of Period 1
1-Mar
5,000,000
=
2-Mar
2,000,000
=
3-Mar
(5,800,000)
5,800,000 =
4-Mar
600,000
=
600,000
19-Mar
1,200,000
=
21-Mar
(200,000)
=
(200,000)
29-Mar
(400,000)
=
29-Mar
(100,000)
30-Mar
800,000
=
31-Mar
(300,000)
=
Unadjusted Trial Balance
1,400,000
800,000
600,000 5,800,000 =
400,000
0
Adjustments for Period 1 of Rohan Software Limited
=
Supplies, closing stock adjustment
(100,000)
=
Depreciation, computers
(200,000) =
Accured Interest
=
40,000
Adjusted Trial Balance
1,400,000
800,000
500,000 5,600,000 =
400,000
40,000
Profit & Loss Statement for Period 1

Balance Sheet at the end of Period 1

Assets
=
Liabilities
Cash
Receivables
Supplies
Computer = Trade Payables Interest Payable
1,400,000
800,000
500,000 5,600,000 =
400,000
40,000
Rohan Software Limited: Accounting Equation for each transaction of Period 2
Cash
Receivables
Supplies
Computer
= Trade Payables
Interest Payable
Opening Balances
1,400,000
800,000
500,000
5,600,000 =
400,000
40,000
Credit Sales
1,000,000
=
Cash Sales
500,000
=
Salaries Expense
(400,000)
=

Ram Kumar Kakani

Financial Accounting

Rent Expense
(100,000)
Interest Expense Related & In
(80,000)
Loan Repaid
(200,000)
Adjustment, Depreciation for Period 2
Supplies, closing stock adjustment for Period 2
Adjusted Trial Balance
1,120,000
1,800,000

=
=
=
(200,000) =
(100,000)
=
400,000 5,400,000 =

Academic Year 2012

(40,000)

400,000

Profit & Loss Statement for Period 2

Balance Sheet at the end of Period 2

Assets
=
Liabilities
Cash
Receivables Supplies
Computer = Trade Payables Interest Payable
1,120,000
1,800,000
400,000 5,400,000 =
400,000
0

Ram Kumar Kakani

Financial Accounting

ties

ties

Loan, Venu

Contributed Capital

Owners Equity
Reserves, Past
Profit for the Period

Academic Year 2012

Profit for the Period
Revenue
Expenses
Dividends

5,000,000
2,000,000

1,200,000
(400,000)
(100,000)
800,000
2,000,000

2,000,000

5,000,000

5,000,000

1,200,000

860,000

2,000,000

(500,000)

(300,000)
(300,000)

2,000,000

(100,000)
(200,000)
(40,000)
(840,000)

(300,000)

Profit for the Period Revenue

Expenses
Dividends
860,000 2,000,000
(840,000) (300,000)

Owners Equity
Loan, Venu Contributed Capital
Reserves
2,000,000
5,000,000
860,000
Loan, Venu Contributed Capital
Reserves, Past
Profit for the Period
2,000,000
5,000,000
860,000

Revenue

Expenses

1,000,000
500,000
(400,000)

Dividends

ties

Ram Kumar Kakani

Financial Accounting

Academic Year 2012

(100,000)
(40,000)
(200,000)

1,800,000

5,000,000

860,000

660,000

1,500,000

(200,000)
(100,000)
(840,000)

Profit for the Period Revenue

Expenses
Dividends
660,000 1,500,000
(840,000)
0

Owners Equity
Loan, Venu Contributed Capital Reserves
1,800,000
5,000,000
1,520,000

116 IAS Induction Industries India Limited, Balance Sheet for the Periods 1 and 2 (Ending)
Assets
Item
Current Assets
Cash
Receivables
Inventory
Other Current Assets
Total Current Assets
Fixed Assets
Machinery, Net
Other Fixed Items, Net
Total Fixed Assets
Other Assets
Investments
Total Other Assets

Total Assets

Period 1

Period 2

Amount

Amount

1,400,000
800,000
500,000
2,700,000
5,600,000
5,600,000
-

8,300,000

1,120,000
1,800,000
400,000
3,320,000
5,400,000
5,400,000

Liabilities
Item
Current Liabilities
Trade Payables
Other Payables
Provisions
Total Current Liabilities
Long Term Liabilities
Loan, Secured
Loan, Unsecured
Total Long Term Liabilities
Shareholders' Funds
Equity Capital
Reserves
Total Shareholders Funds

8,720,000 Total Liabilities & Equity

116 IAS Induction Industries India Ltd., Profit & Loss Statement for the Periods 1 and 2

Period 1

Period 2

Amount

Amount

400,000
40,000
440,000

400,000
400,000

2,000,000
2,000,000

1,800,000
1,800,000

5,000,000
860,000
5,860,000

5,000,000
1,520,000
6,520,000

8,300,000

8,720,000

Item
Sales
Less: Cost of Goods Sold (including Salaries)
Gross Profit
Less: Sales Expenses
Less: Administration Expenses
Less: General Expenses
EBIDTA
Less: Depreciation & Amortization Expenses
Operating Profit
Add: Other Income
Adjusted for Extraordinary & Past Period Items
EBIT
Less: Interest Expenses

Period 1
Amount
2,000,000
(500,000)
1,500,000
0
(100,000)
0
1,400,000
(200,000)
1,200,000
0
0
1,200,000
(40,000)

Profit Before Tax (PBT)

Less: Income Tax Expenses
Profit After Tax (PAT also known as, Net Income)
Less: Dividends for the Period
Profit/Loss Transferred to the Balance Sheet

1,160,000
0
1,160,000
(300,000)
860,000

Period 2
Amount
1,500,000
(500,000)
1,000,000
0
(100,000)
0
900,000
(200,000)
700,000
0
0
700,000
(40,000)
660,000
0
660,000
0
660,000