FINANCIAL STATEMENT ANALYSIS-MODULE 1

Q1 Following financial statement for the year ended 31st March, 2017 are submitted to you by
the accountant of Star Ltd.

Trading and Profit and Loss Account for the Year ended 31st March, 2017
Particulars Rs. Particulars Rs.
To Opening Stock 70,000 By Sales 16,60,000
To Purchases 15,30,000 By Closing Stock 1,60,000
( - ) Returns 30,000 15,00,000
To Gross Profit 2,50,000
18,20,000 18,20,000

To Depreciation 36,000 By Gross Profit 2,50,000

To Administration Expenses 50,000 By Interest 10,000
To Selling & Distribution Expenses 24,000
To Provision for Income-tax 40,000
To Proposed Dividend 16,000
To Profit Balance 94,000
2,60,000 2,60,000

Q.2 Following is the Profit and Loss Account of Well-balanced Limited for the year ended
31st March, 2017. You are required to prepare Vertical Income statement for purpose of
analysis.

Particulars Rs. Particulars Rs.

To Opening Stock 7,00,000 By Sales
To Purchases 9,00,000 Cash 5,20,000
To Wages 1,50,000 Credit 15,00,000
To factory Exp. 3,50,000 20,20,000
To Office salaries 25,000 Less: Returns & Allowance 20,000 20,00,000
To Office Rent 39,000 By Closing Stock 6,00,000
To Postage & Telegram 5,000 By Dividend on Investment 10,000
To Directors Fees 6,000 By Profit on sale of 20,000
To Salesman Salaries 12,000 Furniture
To Advertising 18,000
To Delivery Expenses 20,000
To Debenture Interest 20,000
To Depreciation
On Office Furniture 10,000
On Plant 30,000
On Delivery Van 20,000
To Loss on Sale of Van 5,000
To Income Tax 1,75,000
To NP 1,45,000
Total 26,30,000 Total 26,30,000
FINANCIAL STATEMENT ANALYSIS-MODULE 1

Q.3 The following information regarding Maruti car Ltd. for the year ended 31st March.2017 is
given to you.
Rs.
Sales 75,00,000 Computer Repairs and 84,000
Maintenance
Purchases 50,00,000 Rent, Rates, Taxes 4000
Opening Stock 5,00,000 Printing and Stationery 400
(01/04/2016)
Closing Stock (31/03/2017) 7,50,000 Bad Debts 75,750
Return Inward 75,000 Purchase of Computer 40,000
Carriage Outward 57,000 Dividend on Shares (Cr) 10,000
Carriage Inward 50,000 Staff Welfare Expenses 44,000
Return Outward 50,000 Interest (Dr.) 50,000
Salesmen Salary 75,000 Loss on Sales of Shares 1,25,000
Advertising and Publicity 2,52,000 Office Salary 4,00,000
Salesmen Travelling 7,500
Allowance

Rearrange above information in Vertical Form suitable for analysis.

Q4 Rearrange the above statements in a form suitable for analysis and determine Net Worth, Quick
Assets, Quick Liabilities, Operating Profit and Retained Earnings.

Balance Sheet as at 31st March, 2017

Liabilities Amount Assets Amount

Share Capital 3,00,000 Goodwill 20,000

Profit and Loss Account 1,80,000 Cash in Hand 8,000
Proposed Dividend 16,000 Stock in Trade 1,60,000
Bank Overdraft 38,000 Sundry Debtors 1,78,500
Sundry Creditors 26,000 Land & Building 92,150
Provision for Depreciation 55,750 Plant & Machinery 1,28,600
Provision for Tax 40,000 Prepaid Expenses 1,500
Expenses on Issue of Shares 7,000
Short Term Investments 60,000
6,55,7500 6,55,750

Q.5 Following is the Balance Sheet of Abhijeet Ltd. as on 31st March, 2017.

Liabilities Rs. Assets Rs.

Equity Share Capital 3,90,000 Cash in Hand 15,000
10% Preference Share 2,00,000 Cash at Bank 90,000
Capital
9% Debenture 2,50,000 Preliminary Expenses 20,000
General Reserve 60,000 Goodwill 1,00,000
Capital Reserve 50,000 Building 3,00,000
11 % Bank Loan 1,00,000 Investment (Long-Term) 2,00,000
FINANCIAL STATEMENT ANALYSIS-MODULE 1

Creditors 1,25,000 Furniture 2,50,000

Bank Overdraft 1,35,000 Plant and Machinery 3,00,000
Provision for Tax 1,40,000 Debtors 1,50,000
Proposed Dividend 30,000 Prepaid Expenses 50,000
Profit and Loss A/c 1,40,000 Stock 2,00,000
Depreciation provision 80,000 Calls in arrears (Equity) 10,000
Commission on Issue of 15,000
Shares
17,00,000 17,00,000
Present the above Balance Sheet in vertical form and show the following:Net worth.
Borrowed Fund. Capital Employed. Net Block. Working Capital. Fictitious Assets.

Q 6 You are required to present the above Balance Sheet in vertical form.
Equity share capital 2,50,000 Land & Building at cost 2,50,000
12% Preference share capital 1,00,000 Plant & Machinery at cost 1,30,000
13.5% Secured debentures 1,00,000 Furniture & Fixtures at cost 40,000
Investment allowance reserve 15,000 Stock in trade 1,10,000
General reserve 35,000 Sundry debtors 1,42,000
Profit & Loss A/c 25,000 Patents, trademarks & Designs 35,000
Proposed dividend 37,000 Loose tools 10,000
Unclaimed dividend 5,000 Cash & Bank balances 45,000
Sundry creditors 83,000 Marketable investments 45,000
Secured loan 87,000 Prepaid expenses 15,000
Bank overdraft 25,000 Temporary advances 12,000
Provision for depreciation 35,000 Preliminary expenses 20,000
Provision for taxation 45,000
Provision for doubtful debts 12,000
8,54,000 8,54,000
 FINANCIAL STATEMENT ANALYSIS-MODULE 1

Q7 From the following trial balance of Asiana Hotels Ltd. for the year ended 31/03/2017.

Particulars Rs. Particulars Rs.

Land & Building 120,000 Sundry Creditors 35,000

Plant & Machinery 145000 Reserves 25,000

Furniture & Fittings 3,500 Profit & Loss A/c 1-4-2016 9,450

Preliminary Expenses 4,800 Bank Overdraft 12,000

Calls in arrears (at Rs. 20 per share) 1,600 Return Outwards 4,000

Cash in hand 750 Sales 350000

5% Govt. Bonds 9,800 Share Capital 250000

Bills Receivable 21,000 6% debentures 86000

Delivery Van 35,000

Goodwill 40,000

Sundry debtors 21,000

Purchases 260000

Advertising 2,500

Sales Return 8,000

Legal Charges 1,200

Carriage Inwards 3,500

Wages 25,000

Rent, Rates and Insurance 3,000

Opening Stock 45,000

Prepaid Expenses 2,000

 FINANCIAL STATEMENT ANALYSIS-MODULE 1

Travelling Expenses 1,500

Repairs to Plant & Machinery 800

Proposed Dividend 4,500

Salaries 12,000

771,450 771,450

You are required to prepare Profit & Loss account and Balance Sheet in Vertical Format as per
Management Accounting after taking into consideration the following adjustments:
(1) Charge 5 % Depreciation on Plant and Machinery, 10% on Furniture & Fittings and 20%
on Delivery Van.
(2) Closing stock was Rs. 60550 as on 31st march, 2017.
(3) Interest on Govt. Bonds and Debentures is to be ignored

Q 8 Following is the trial balance of Rajnikant pvt. Ltd. as on 31/03/2017. Prepare Income Statement
& Balance sheet in vertical format suitable for analysis.

Particulars Amt.(Rs.) Particulars Amt.(Rs.)

Plant & Machinery 7,50,000 sales 8,50,000

Commission on sales 40,000 Bills Payable 45,000

Stock 1,25,000 By dividend received 3,000

Debtors 1,65,000 Sundry Creditors 40,000

Telephone Expenses 45,000 Debentures 2,50,000

Long term Investments 80,000 Profit & loss Account 50,000

Preference Share
Cash 35,000 3,50,000
Capital

Interest on debentures 35,000 Equity Share Capital 6,50,000

Opening stock 65000 General Reserve 60,000

By Interest on
Furniture & Fixtures 2,00,000 2,000
investment

Factory Managers
30,000 Bank Overdraft 20,000
Remuneration
FINANCIAL STATEMENT ANALYSIS-MODULE 1

Discount allowed 4000 Public Deposits 2,00,000

Legal Expenses 32,000

Salaries 40,000

Selling expenses 40,000

Factory Building 3,00,000

Purchases of Raw Material 320000

Bank 75,000

Insurance of factory Building 25,000

Travellling expenses 30,000

wages 44,000

Short term Advance 40,000

25,20,000 25,20,000

Q9 The following trial balance was taken from the books of Titan pvt. Ltd. as on 31/03/2017.

Particulars Debit Credit

Cash 13,000

Sundry debtors 10,000

Bill receivable 8,500

Opening stock 45,000

Office Building 50,000

Furniture and fittings 10,000

Investment (Temporary) 5,000

Plant and Machinery 15,500

Bills payable 9,000

Sundry creditors 20,000

Equity Share Capital 78,200

FINANCIAL STATEMENT ANALYSIS-MODULE 1

Calls in arrears 1,000

Sales 100,000

Sales Returns 400

Purchases 30,000

Freight inward 1,000

Purchase returns 500

Sales commission expenses 5,000

Advertising expenses 4,000

Miscellaneous sales expenses 500

Office salary expenses 8,000

Misc. general expenses 810

Interest on Investment 1,000

Interest on debentures 800

Outstanding Expenses 400

Capital Redemption Reserve 250

Prepaid Expenses 450

Patents and patterns 1500

Discount on issue of Shares 80

Bank overdraft 90

Debentures 300

Preference Share Capital 2,000

Goodwill 1200

211,740 211,740

Additional Information

1) Stock on 31/03/2017 is to be valued at Rs.1950

FINANCIAL STATEMENT ANALYSIS-MODULE 1

2) Depreciation is to be provided on tangible fixed assets @10%.

3) Authorised share capital of company consists of 8000 equity shares of Rs.10 each and 3000
preference shares of Rs. 1 each
4) Bills discounted but not matured amounts to Rs.10000

Q10 Following is the Trial Balance of M/S Suketu Private ltd. as on 31.03.2017.

Particulars Dr. Rs. Cr. Rs.

Opening Stock 45,000
9000 Equity shares of Rs.10 each 90,000
Plant and Machinery 85,000
Trade Creditors 40,000
Fixtures & Fittings 7,500
Discount Received 3,500
Freehold Premises 75,000
Bank overdraft 20,000
Purchases 1,50,000
Provision for Bad Debts 3,000
Salaries 14,000
Purchase Returns 1,500
Sundry Debtors 55,000
Sales (net) 2,87,070
Manufacturing Expenses 15,000
Manufacturing Wages 30,000
Carriage Inwards 2,000
Carriage Outwards 2,100
Administrative Expenses 10,000
Debentures 50000
Bad Debts 750
Interest and Bank Charges 625
Discount Allowed 750
Insurance 1,500
Cash at Bank 695
Cash in Hand 150
4,95,070 4,95,070

The following adjustments are required:

(a) Closing stock as on 31st March, 2014 was Rs.57,000
(b) Depreciation on Plant and Machinery @ 10%, Fixtures & Fittings @ 5%
(c) Prepaid Insurance Rs.500
(d) Outstanding interest on overdraft Rs.2,500
Prepare vertical financial statement suitable for analysis.
FINANCIAL STATEMENT ANALYSIS-MODULE 1

Q11 From the following Trail Balance of Top security Ltd. as at 31st December, 2017, you are
required to prepare his vertical Income Statement for the year ended 31st December 2017 and a
vertical Balance Sheet as at that date after making the necessary adjustments

Particulars Debit (Rs.) Credit (Rs.)

16000 equity shares of Rs.10 each 160,000

Calls in arrears 16,000

Machinery balance as on 1/1/2017 40,000

Additions 1st July 2017 10,000

Stock- 1st Jan 2017 26,000

Purchases & Sales 164,000 240,000

Returns 4,000 2,400

Sundry Debtors & creditors 41,200 20,000

Furnitures & Fixtures 10,000

Freight Inward 4,000

Carriage Outward 1,000

Rent, Rates & Taxes 9,200

Printing & Stationery 2,000

Trade expenses 800

Postage & Telephone 1,600

Provision for Doubtful Debts written back 800

Insurance Charges 1,400

Salaries & Wages 42,600

Cash at Bank 49,400

Total 423,200 423,200

FINANCIAL STATEMENT ANALYSIS-MODULE 1

Adjustments:
1. Stock on 31st December, 2017 was valued at Rs. 29,200 (Market value Rs. 30,000).
2. Write off Rs. 2,000 as bad debts.
3. Provide for depreciation on Furniture & Fixture at 5% p.a. and on Plant & Machinery at 20% p.a.
4. Insurance prepaid was Rs. 200.