QUESTION NO 1 SOLUTION

TRADING AND PROFIT& LOSS ACCOUNT

(For the year ended on 31 March 1982) PARTICULARS To opening stock To purchase To wages To gross profit C/d To salary To rent To Electricity To general charges To discount To postage and telephone (includes Rs. 1000 for the Telephone bill remain unpaid) To Petty Cash expenses To advertising(Rs 6000 is Deferred revenue expenditure& is equally written off for 3 years To lease hold land (Written off) To Depreciation To net profit C/d AMOUNT 50000 400000 40000 189000 679000 12000 9000 6000 4000 11400 4000 9600 5000 4000 1200 128960 195160 195160 PARTICULARS By sales(includes Rs. 4000 being sales under casted) By closing stock (Market value 80000) AMOUNT 604000 75000

By gross profit B/d By Change in depreciation

679000 189000 6160

BALANCE SHEET
(For the year ended on 31 March 1982) LIABILITIES Capital fund Add Net profit Less Drawings Sundry creditors Suspense Outstanding expenses 34000 128960 (26000) AMOUNT (RS) ASSETS Lease hold land 136960 Motor car Sundry debtors 35000 Closing stock Cash 10000 Bank 1000 Miscellaneous expenses (Differed Revenue expenses) 182960 AMOUNT (RS) 16000 15200 49000 75000 6760 17000 4000

182960

Question 2

Solutions (a) STATEMENT SHOWING CHANGES IN WORKING CAPITAL Particulars (a) CURRENT ASSETS Stock Sundry Debtors Cash Bank Total (a) (b)CURRENT LIABILITIES Sundry creditors Bills Payable Total (b) Net working capital Decrease in working capital 28000 8000 36000 11650 24000 8500 32500 4750 5900 25500 22000 150 47650 18500 16200 450 2100 37250 2000 2001

( b) SOURCES OF FUND Fund from operation Increase in share capital Sale of plant Decrease in working capital

FUND FLOW STATEMENT AMOUNT 12600 20000 6500 5900 APPLICATION OF FUND Dividend paid Payment of bank loan Purchase of plant AMOUNT 6000 25000 14000

45000

45000

WORKING NOTES (1) Particulars To balance b/d To reserves To goodwill To dividend To depreciation

Adjusted

Profit/ Loss account

Particulars Amount

Amount 8600 2500 750 6000 6550

By Fund from operation(bal) By profit on sale of plant By balance c/d

12600 3000 8800 24400

24400

QUESTION 3

I. LIQUIDITUY RATIOS It includes 1. Current Ratios = Current Assets Current Liabilities = 2.52: 1 = 3.4: 1

For Year 2000= 96000 38000 For Year 2001= 68000 20000

2. Quick liabilities = Current Assets - Inventories Current Liabilities Bank ODI

For Year 2000= 72000 38000 For Year 2001= 40000 20000

= 1.89: 1 = 2: 1

II INVENTORY RATIOS Formula = Cost of good sold Average Stock Average Stock = (Opening stock+ Closing Stock)/2 For Year 2000 = 100000 25000 For Year 2001= 138000 21000 = 4 = 6.57

III AVERAGE COLLECTION PERIOD

Formula = Cost of good sold Sundry Debtors

1 365

For Year 2000= 150000 * 1/365 = 146 Days 60000 For Year 2001= 184000 * 1/365 = 73 Days 36000 IV OPEARTIN RATIOS

FORMULA = Operating Profit(sales- cost of good sold) Sales

For Year 2000= 50000 *100 = 33.33% 150000 For Year 2001= 46000 *100 184000 = 25%

MCSL-036 Section 3 MC0-035

SOLUTION (a) DATE 04/09/2008 JOURNAL ENDRIES PARTICULARS L/F DEBIT (RS) 500000 CREDIT (RS) 500000

Cash account DR Capital Fund A/C (Being cash introduced to start the hospital business transferred to capital Fund) 08/09/2008 Bank account DR Cash account (Being cash deposited in to bank) 12/09/2008 Equipment account DR To Cash Account (Being Equipment costing 200000 purchased) 16/09/2008 Purchase account DR To Cash Account (Being drugs purchased to be consumed in hospital) 20/09/2008 Cash Account DR To Fees account (Being Fees amount collected from the patients) 25/08/2008 Salary account DR To Cash Account (Being salary paid to the employees in cash) 30/09/2008 Rent Account DR To Bank Account (Being rent paid to landlord through bank account)

150000 150000 200000 200000 100000 100000 50000 50000 100000 100000 60000 60000

(b)

TRIAL BALANCE PARTICULARS DEBIT (RS) CREDIT (RS) 500000

Capital fund Equipment Purchases Fees Salary Rent Bank TOTAL 100000 60000 90000 550000 200000 100000

50000

550000