Question

Show the following items in the Balance Sheet of X ltd:

$\begin{array}{cc}& Rs.\\ \text{Statement of Profit and Loss (Cr.)}& 70,000\\ \text{9\% Debentures}& 10,00,000\\ \text{Preliminary Expenses}& 1,20,000\\ \text{Discount on Issue of 9\% Debentures}& \\ \text{(Amount to be written of in the next three years)}& 45,000\\ \text{Trade Receivables}& 1,50,000\\ \text{Inventory}& 6,40,000\end{array}$

Totalling of Balance Sheet is not required.

Answer 1

EXTRACT OF BALANCE SHEET OF X LTD.
as at .........

$\begin{array}{cccc}\text{Particulars}& \text{Note No.}& \text{Current year}& \text{Previous year}\\ & & \text{Rs.}& \text{Rs.}\\ \text{I. EQUITY AND LIABILITIES:}& & & \\ \text{1. Shareholder's Funds}& & & \\ \text{a. Reserve and Surplus}& 1& (50,000)& \\ \text{2. Non Current Liabilities}& & & \\ \text{a. Long term Borrowings}& 2& 10,00,000& \\ \text{II. ASSETS:}& & & \\ \text{1. Non Current Assets}& & & \\ \text{a. Other Non Current Assets}& 3& 30,000& \\ \text{2. Current Assets}& & & \\ \text{a. Inventory}& & 6,40,000& \\ \text{b. Trade Receivables}& & 1,50,000& \\ \text{c. Other Current Assets}& 4& 15,000& \end{array}$

Notes to Accounts:

$\begin{array}{cc}& \text{Rs.}\\ \text{(1) Reserve and Surplus}& \\ \text{Surplus:}& \\ \text{Statement of Profit and Loss(Cr.))}70,000& \\ \text{Preliminary Expenses Written off}\underset{–}{(1,20,000)}& (50,000)\\ \text{(2) Long term Borrowings:}& \\ \text{9\% Debentures}& \underset{–}{\underset{–}{10,00,000}}\\ \text{(3) Other Non Current Assets:}& \\ \text{Discount on Issue of 9\% Debentures (2/3 rd of Rs. 45,000)}& \underset{–}{\underset{–}{30,000}}\\ \text{(4) Other Current Assets:}& \\ \text{Discount on Issue of 9 \% Debentures (1/3 rd of Rs. 45,000)}& \underset{–}{\underset{–}{15,000}}\end{array}$

$\begin{array}{c}\text{Notes for Students:}\\ \\ \left(i\right)\text{Preliminary Expenses are to be written off entirely in the year in which}\\ \text{they are incurred. They should be written off first from Securities}\\ \text{Premium and in its absense from Statement of Profit and Loss.}\\ \\ \left(ii\right)\text{Borrowing Costs such as Discount on issue of debentures could}\\ \text{be written off over loan period.}\\ \\ \left(iii\right)\text{Share Issue Expenses, Underwritig Commission, being special nature}\\ \text{items could be written off gradually, say, between 3-5 years.}\end{array}$