Question

A company has an opening credit balance in Surplus, i.e., Balance in Statement of Profit and Loss of ₹ 1,00,000. During the year, it earned a profit of ₹ 75,000. It decided to transfer ₹ 15,000 to Debentures Redemption Reserve (DRR) and also proposed to pay dividend of ₹ 25,000.

How will be the appropriations shown in the financial statements?

Answer 1

Extract of Balance Sheet as at …..
Particulars	Note No.	Amount (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital
b. Reserves and Surplus	1	1,50,000
2. Share Application Money Pending Allotment
3. Non-Current Liabilities
4. Current Liabilities
a. Short-term Provisions	4	25,000
Total

NOTES TO ACCOUNTS

Note No.	Particulars			Amount (Rs)
1	Reserves and Surplus
	(a) Surplus, i.e. Balance in Statement of Profit and Loss	1,00,000
	Add: Profit for the year	75,000
	Less: Appropriations
	Transfer to Debenture Redemption Reserve		(15,000)
	Proposed Dividend		(25,000)	1,35,000
	(b) Debenture Redemption Reserve
	Transferred from Surplus i.e. Balance in Statement of Profit and Loss			15,000
	Total (a + b) [to be Shown in Balance Sheet against Reserves and Surplus]			1,50,000
4	Short-term Provisions
	Proposed Dividend			25,000