Question

Kotak Ltd. has the following balance on 1st April, 2016:

Rs.

Statement of Profit & Loss (2,00,000)

Debenture Redemption Reserve 6,00,000

Capital Reserve 5,00,000

It earned a profit of Rs. 10,00,000 for the year ended 31st March, 2017. It decided to transfer Rs. 2,00,000 to Debenture Redemption Reserve and Rs. 3,00,000 to General Reserve. Directors proposed a final dividend of Rs. 1,20,000.

Show how these items will appear in the Balance Sheet and notes to accounts.

Answer 1

Kotak Ltd.

EXTRACT OF BALANCE SHEET

as at 31st March, 2017

$\begin{array}{cccc}\text{Particulars}& \text{Note}& \text{31.03.2017}& \text{31.03.2016}\\ & \text{No.}& & \\ & & \text{Rs.}& \text{Rs.}\\ \text{1. EQUITY AND LIABILITIES :}& & & \\ \text{(1) Shareholder's Funds}& & & \\ \text{Reserves and Surplus}& 1& 17,80,000& 9,00,000\\ \text{(2) Current Liabilities :}& 2& 1,20,000& \\ & & \overline{\underset{–}{\underset{–}{19,00,000}}}& \end{array}$

Notes to Accounts :

$\begin{array}{cccc}& & & \text{31.03.2017}\\ \text{(1) Reserves and Surplus :}& & & \\ \text{(a) Capital Reserve}& & & 5,00,000\\ \text{(b) Debenture Redemption Reserve :}& & & \\ \text{Opening Balance}& & 6,00,000& \\ \text{Transfer from Surplus}& & \underset{–}{2,00,000}& 8,00,000\\ \text{(c) General Reserve :}& & & \\ \text{Opening Balance}& & -& \\ \text{Transfer from Surplus}& & \underset{–}{3,00,000}& 3,00,000\\ \text{(d) Surplus :}& & & \\ \text{Balance in Statement of Profit}\&\text{Loss (Opening)}& & (2,00,000)& \\ \text{Surplus for the Period}& & \underset{–}{10,00,000}& \\ \text{Available for Appropriations}& & 8,00,000& \\ \text{Less : Appropriations :}& & & \\ \text{Debenture Redemption Reserve}& 2,00,000& & \\ \text{General Reserve}& 3,00,000& & \\ \text{Proposed Dividend}& \underset{–}{1,20,000}& \underset{–}{6,20,000}& 1,80,000\\ & & & \overline{\underset{–}{\underset{–}{17,80,000}}}\\ \text{(2) Short term Provisions :}& & & \\ \text{Proposed Dividend}& & & 1,20,000\end{array}$