CHP-2 Analysis & Interpretation of Accounts

VERTICAL BALANCE SHEET

Q.1. Following are the summary Balance Sheet Of Abhijit Ltd. as on 31st March 2017

Liabilities Rs. Assets Rs.

Equity share Capital 3,90,000 Cash in Hand 15,000
10% Preference share capital 2,00,000 Cash at Bank 90,000
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
Creditors 1,25,000 Furniture 2,50,000
Bank overdraft 1,35,000 Plant & Machinery 3,00,000
Provision for tax 1,40,000 Debtors 1,50,000
Outstanding Expenses 30,000 Prepaid Expenses 50,000
Profit & 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 Format and show the following
1. Net worth 2. Borrowed Fund 3. Capital Employed
4. Net Block 5. Working Capital 6. Fictitious Assets

VERTICAL INCOME STATEMENT

Q.2. The following balances appear in the books of M/S. Bhushan for the year ended 31st March
2017. You are required to prepare a Revenue Statement in Vertical Form.
 Particulars Rs. Particulars Rs.
Opening stock 50,000 Sales Return 20,000
Net profit b/f from P.Y 60,000 Profit on sale of Investment 5,000
Office Rent 5,000 Loss by Fire 5,000
Carriage Inward 20,000 Closing stock 40,000
General Reserve 75,000 Purchases 2,00,000
Wages 72,000 Postage & Telegram 5,000
Octroi 5,000 Provision for Tax 30,000
Office staff Expenses 40,000 Sales 6,20,000
Audit Fees 20,000 Dividend on shares held 25,000
Advertisement 25,000 Carriage Outward 5,000
Finance Expenses 25,000 Warehouse Expenses 5,000
Loss on sale of Asset 30,000 Import Duty 3,000
Depreciation
-Plant & Machinery 15,000
-Furniture 16,000
-Delivery Van 14,000

TREND BALANCE SHEET

Q.3 M/S Sudesh Ltd carrying on business furnishes their position as on 31st December
2015,2016,2017 as under:

Liabilities 2015 2016 2017 Assets 2015 2016 2017

(Rs) (Rs) (Rs) (Rs) (Rs) (Rs)

Equity Share 3,00,000 3,00,000 4,00,000 Fixed 3,00,000 3,00,000 4,00,000

Capital Assets
Preference 2,00,000 2,00,000 2,50,000 Investment 1,00,000 1,00,000 1,00,000
Share Capital
General 50,000 1,00,000 1,00,000 Debtors 1,00,000 1,50,000 2,00,000
Reserve Stock 50,000 1,00,000 50,000
Secured Loan 1,00,000 1,00,000 50,000 Advanced 50,000 50,000 50,000
Sundry 40,000 80,000 80,000 Paid
Creditors Cash 50,000 50,000 50,000
 Bills Payable 10,000 20,000 20,000 Bank 25,000 40,000 45,000
Discount 25,000 10,000 5,000
on issue of
shares

7,00,000 8,00,000 9,00,000 7,00,000 8,00,000 9,00,000

Prepare Vertical Trend Balance sheet.

TREND INCOME STATEMENT

Q.4. Following balances are extracted from the books of Rama Ltd:

PARTICULARS 2015 2016 2017

(Rs) (Rs) (Rs)

Net Sales 30,000 40,000 50,000

Opening Stock 3,000 5,000 7,000
Purchases 17,000 19,000 20,000
Wages 1,500 3,000 2,000
Carriage Inward 2,000 4,000 4,000
Closing Stock 5,000 7,000 6,000
Office Expenses 1,000 1,200 1,500
Selling Expenses 700 900 1,000
Finance Expenses 600 1,000 2,000
Non Operating Income 800 900 1,000
Non Operating 500 300 500
Expenses
Tax 40% 40% 40%

You are required to prepare a vertical Trend Analysis Income Statement from the above.

COMPARATIVE BALANCE SHEET

Q.5 XYZ Ltd. provides you with the following balance sheet. Prepare a comparative statement
and offer your comments.

Liabilities 2016 2017 Assets 2016 2017

(Rs) (Rs) (Rs) (Rs)
Equity Share 1,30,000 1,30,000 Goodwill 30,500 20,500
Capital Building 85,000 80,700
Preference Share 1,20,000 1,65,000 Machinery 1,20,000 2,29,000
Capital Investment 60,000 80,200
Capital Reserve 24,000 24,000 Short Term 75,800 47,700
Profit & Loss a/c 40,000 51,000 Invest
10% Debentures 50,000 1,30,000 Debtors 50,000 97,000
Creditors 30,000 37,000 Stock 30,000 47,400
Bills Payable 60,500 75,000 Cash & Bank 26,200 45,000
Tax Provision 23,000 35,500

4,77,500 6,47,500 4,77,500 6,47,500

COMPARATIVE INCOME STATEMENT

Q.6 From the following information prepare Comparative Income Statement:
Trading and Profit & Loss A/C for the year ended 31st March 2017 & 2018

Particulars 2017 2018 Particulars 2017 2018

(Rs) (Rs) (Rs) (Rs)

Opening stock 80,000 3,20,000 Sales 10,20,000 15,00,000

Purchases 7,00,000 6,00,000 Closing 90,000 4,00,000
Dep on Furniture 15,000 nil stock
Electricity Expense 50,000 2,50,000
Interest On O/D nil 40,000
Interest on loan 25,000 25,000
Tax 1,00,000 1,07,500
Net Profit 1,40,000 5,57,500

11,10,000 19,00,000 11,10,000 19,00,000

COMMON SIZE STATEMENT

Q.7 Prepare common size Financial Statement in a form suitable for analysis:
Balance sheet as on 31st March 2017

Liabilities (Rs) Assets (Rs)

Sundry Creditors 10,500 Cash 6,750
Outstanding Expenses 19,500 Debtors 27,750
Loans\ 56,250 Prepaid Expenses 55,000
Capitals 1,64,500 Stock 25,000
Reserves 25,000 Other Current Assets 2,500
Fixed Assets 1,58,750

2,75,750 2,75,750

Income statement for the year ending 31st march 2017

Expenses (Rs) Income (Rs)

To cost of goods sold 1,77,750 By Net Sales 3,17,250

To Selling Overheads 90,000 By Other Income 3,000
To Administration & 23,000
General Expenses
To Tax 8,500
To Loss on sale of 12,000
Investments
To Net Income 9,000

3,20,250 3,20,250

Common size Incomplete Revenue Statement

Q.8
Particulars (Rs)

Net Sales 16,00,000

Less: COGS ?
Gross Profit ( 25% on sales) ?
Less: Operating Expense ?
Operating Net Profit 2,00,000
Add: Non Operating Income 1,00,000
Less: Non Operating Expenses ?
Net Profit Before Tax 2,80,000