FINACMAN 6th Ed.

CHAPTER 4-SOLUTION

Ex. 1

Req. 1
Financial statements

SANJAY INDUSTRIES LTD.

BALANCE SHEET AS AT 31ST MARCH 2006.
Amount Amount
Liabilities (Rs.) Assets (Rs.)

Share Capital Fixed Assets

Authorised Patents & trademark 43,200

2,00,000 shares of Rs. 10 Less: Amortised@
each. 20,00,000 5% 2,160 41,040

Issued, Subscribed and Plant & Machinery 2,61,000

Paid-Up: Less: Dep.@ 14% 36,540 2,24,460
90,000 shares of Rs. 10
each. 9,00,000
Reserves And Surplus Furniture & fittings 1,53,000
Less: Dep. @ 18% 27,540 1,25,460
General Reserve 1,39,500 Current Assets,
Add: created during the Loans & Advances
year 16,303 1,55,803
Balance in P&L A/C 2,73,758 A. Current Assets:
Current Liabilities and Inventory 7,92,000
Provisions
A. Current Liabilities: Debtors 2,47,500
Less: Provision for
Doubtful Debts 4,590 2,42,910
Creditors 1,57,500 Bills receivable 45,000
Bills payable 63,000 Cash-at-bank 4,15,800
Outstanding Expenses:
 Rent 7,200
 Salaries 8,100
 Managerial
remuneration 55,737 71,037
B. Provisions:
Income Tax 1,75,572
Proposed Dividend 90,000
Total… 18,86,670 Total… 18,86,670
 SANJAY INDUSTRIES LTD.
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2006.
Expenses Amount Income Amount
(Rs.) (Rs.)
Opening Inventory 6,75,000 Sales 30,60,000
Purchases 22,05,000 Closing Inventory 7,92,000
Less: Purchase Return 90,000 21,15,000
Carriage Inwards 8,550
Wages 2,70,000
Gross Profit c/d 7,83,450
Total… 38,52,000 Total… 38,52,000
Salaries 67,500 Gross Profit b/d 7,83,450
Add: outstanding 8,100 75,600
Depreciation: Discount 27,000
 Plant and machinery 36,540
 Furniture & fittings 27,540 64,080
Amortisation of patents &
trademark 2,160
Rent 36,000
Add: outstanding 7,200 43,200
Sundry Expenses 63,450
Provision for Doubtful
Debts 4,590
Provision for managerial
remuneration 55,737
Provision for Income Tax 1,75,572
Net Profit c/d 3,26,061
Total… 8,10,450 Total… 8,10,450
Transfer to General Balance as on 1st April 2001 54,000
Reserve 16,303

Proposed Dividend 90,000 Net Profit for the year b/d 3,26,061
Balance Carried to
Balance Sheet 2,73,758
Total… 3,80,061 Total… 3,80,061

NOTES:

 Provision for managerial remuneration: 10% of net profit before tax, i.e., 10% of [(8,10,450)
– (75,600 + 64,080 + 2,160 + 43,200 + 63,450 + 4,590 = 2,53,080)] = 55,737.

 Provision for income tax: 35% of [(8,10,450 – (2,53,080 as above + 55,737 = 3,08,817)] =
1,75,572.
 6th edition
Chapter 5

Ex. 1 Sanjay Industries Ltd.

SANJAY INDUSTRIES LTD.

BALANCE SHEET AS AT 31-03-20CY
Note no. Amount (₹)
ASSETS
Non-Current Assets
Fixed Assets: 1
.....Property, Plant and Equipment 349920
..... Capital work-in -progress .....
.....Investment property ……..
.....Intangible assets 41040
..... Intangible assets under development .....
Financial Assets: 2
…..Investments …..
…..Trade receivables ....
…..Loans ....
…..Other financial assets …..
Deferred tax assets (net) 2 ....
Other non-current assets 2 ....
Total non-current assets………… 390960
Current Assets 3
Inventories 792000
Financial Assets: …..
…..Investments ....
…..Trade receivables 287910
…..Cash and cash equivalents 415800
…..Bank balances other than cash equivalents above …..
…..Loans ....
…..Other financial assets …..
Current tax assets (net) ....
Other current assets ….
Total current assets….........…… 1495710
Total Assets........ 1886670
EQUITY AND LIABILITIES
Equity
Equity Share Capital 4 900000
Other Equity 5 519561
Total equity………............…….. 1419561
LIABILITIES
Non-Current Liabilities 6
Financial Liabilities:
…..Borrowings ….
 …..Trade payables
…..Other financial liabilities ( those not included in ‘provisions' below) …..
Provisions .....
Deferred tax liabilities (net) .....
Other non-current liabilities .....
Total non-current liabilities………… ………
Current Liabilities 7
Financial Liabilities:
…..Borrowings …….
…..Trade payables 220500
…..Other financial liabilities (those not included in ‘provisions' below) 71037
Other current liabilities …..
Provisions …..
Current tax liabilities (net) 175572
Total current liabilities…......……… 467109
Total Equity and Liabilities......... 18,86,670

Now, the statement of profit and loss.

SANJAY INDUSTRIES LTD.

STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED 31-03-20CY
Note No. Amount (Rs.)

INCOME
Revenue from Operations: 8
Sales (Including excise duty) 30,60,000
Other operating income 27,000
Total Revenue from Operations 30,87,000
Other Income 9 ……
Total income………. 30,87,000
EXPENSES
Cost of materials consumed 10 20,06,550
Purchase of stock in trade 11 …
Changes in inventories of finished goods, stock-in-trade and work-in-progress 12 ….
Excise duty 13 ….
Employee benefit expenses 14 4,01,337
Finance costs 15 ….
Depreciation and amortization expenses 1(fixed assets) 66,240
Other expenses 16 1,11,240
Total Expenses….. 25,85,367
Profit before exceptional items and tax 5,01,633
Exceptional Items 17 …….
Profit before tax 5,01,633
Tax expenses 18 1,75,572
Profit after tax 3,26,061
Other comprehensive income 19 ----
Total comprehensive income (PAT+OCI) 3,26,061
Earnings per equity shares (EPS) of the FV OF RS. 10 each with 20 3.63
reference to PAT
See accompanying notes to the financial statements.

Note: Previous year figures are not available.

Note: Proposed dividend not to be provided for as per IND AS.

Notes to the financial statements:

Note 1: Fixed Assets

Amount (Rs.)
Book value as on Amortization / depreciation Net block as on
1-04-PY for the current year 31-03-CY
A. Property plant and equipment:
Plant & Machinery 2,61,000 36,540 2,24,460
Furniture & fittings 1,53,000 27,540 1,25,460
Sub-total…. 4,14,000 64,080 3,49,920
B. Intangible assets:
Patents & trademark 43,200 2,160 41,040
Sub-total…. 43,200 2,160 41,040
NOTE: The original costs of various fixed assets are not known. Hence disclosures on the basis of book
values.

Note 2: Non-current assets other than fixed assets: NA

Note 3: Current assets

Amount (Rs.)
3.1 Inventories 7,92,000
3.2 Financial assets
A. Trade receivables
Debtors 2,47,500
Less: Provision for Doubtful Debts 4,590
2,42,910
Bills receivable 45,000 2,87,910
B. Cash and cash equivalents
Cash-at-bank 4,15,800

Note 4: Equity Share Capital

Amount (Rs.)

Authorized
2,00,000 shares of Rs. 10 each. 20,00,000
Issued, Subscribed and Paid-Up:
90,000 shares of Rs. 10 each. 9,00,000
Note 5: Other equity

Amount
(Rs.)
A. General Reserve:
As on 01-04-20PY 1,39,500
Add: Created during the year 16,303 1,55,803
B. Retained earnings:
As on 01-04-20PY 54,000
Add: Profit after tax for the year 3,26,061
3,80,061
Less: Transferred to general reserve (16,303)
As on 31-03-20CY 3,63,758 3,63,758
Total…………….. 5,19,,561

Explanation to Note 5:
Proposed dividend You could for sure have observed that current year’s proposed dividend has not been appropriated
out of retained earnings as Ind AS do not recognise proposed dividend as a liability as explained earlier. If actually
paid next year, then it will be appropriated in that year.

Note 6: Non-current liabilities: NA

Note 7: Current liabilities

Amount (Rs.)
7.1 Financial liabilities-
A. Trade payables:
Creditors 1,57,500
Bills payable 63,000 2,20,500
B. Other financial liabilities:
Expenses Payable-
 Rent 7,200
 Salaries 8,100
 Managerial remuneration 55,737 71,037

7.3 Current tax liabilities (net)

Income Tax 1,75,572
Less advance tax …. 1,75,572

Note 8: Revenue from Operations

Amount (Rs.)
Sales 30,60,000
Other operating income: Discount 27,000
Total Net Revenue from Operations 30,87,000

Note 9: Other Income: NA

Note 10: Cost of Materials Consumed

Amount (Rs.)
Opening inventory 6,75,000
Add: Purchases 22,05,000
Less: Purchase Return (90,000) 21,15,000
Carriage Inwards 8,550
27,98,550
Less: Closing Inventory 7,92,000
Cost of materials consumed 20,06,550

Note 11: Purchase of stock in trade: NA

Note 12: Changes in inventories of finished goods, stock-in-trade and work-in-progress: NA
Note 13: Excise duty: NA

Note 14: Employee Benefit Expenses

Amount (Rs.)
Wages 2,70,000
Salaries 67,500
Add: outstanding 8,100 75,600
Provision for Managerial Remuneration 55,737
Total….. 4,01,337

Note 15: Finance costs: NA

Note 16: Other Expenses

Amount (Rs.)
Office rent 36,000
Add: outstanding 7,200 43,200
Sundry Expenses 63,450
Provision for Doubtful Debts 4,590
Total….. 1,11,240

Note 17: Exceptional items: NA

Note 18: Tax Expenses

Amount (Rs.)
Provision for income tax for the year 1,75,572

Note 19: Other comprehensive income: NA

Note 20: EPS

Amount (Rs.)
A. Profit after tax 3,26,061
B. Number of equity shares 90,000
C. EPS…..A/B 3.63