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Comparative Balance Sheet

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Question

____________ statements refer to the Profit and Loss Account and Balance Sheet prepared by providing columns for the figures for both the current year as well as for the previous year and for the changes during the year.

A

Common size

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B

Comparative

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C

Income

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D

Both A and C

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Solution

The correct option is C Comparative
Comparative statements refers to the profit and loss account and balance sheet prepared by providing columns for the figures for both current year as well as for the previous year for the changes during the year. Comparative statements are prepared basically to understand the trend of the company. Hence, its also known as trend analysis.

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Q. Prepare a Trading and Profit & Loss account for the year ending March 31, 2018, from the balances extracted of M/s Rahul Sons. Also prepare a balance sheet as at that date.

Debit Balances	₹	Credit Balances	₹
Stock	50,000	Sales	1,80,000
Wages	3,000	Purchase return	2,000
Salary	8,000	Discount received	500
Purchases	1,75,000	Provision for bad debts	2,500
Sales Return	3,000	Capital	2,90,000
S. Debtors	82,000	Bills Payable	22,000
Discount allowed	1,000	Commission received	4,000
Insurance	3,200	Rent	6,000
Rent, rates and taxes	4,300	Loan	34,800
Fixtures and fittings	20,000	Output CGST	15,000
Trade Expenses	1,500	Output SGST	15,000
Bad debts	2,000
Drawings	32,000
Repair and renewals	1,600
Travelling expenses	4,200
Postage	500
Legal fees	500
Bills Receivable	50,000
Building	1,10,000
Input CGST	10,000
Input SGST	10,000
	5,71,800		5,71,800

Adjustments :-
(i) Commission received in advance ₹ 1,000.
(ii) Rent receivable ₹ 2,000, subject to levy of CGST and SGST @ 9% each.
(iii) Salary outstanding ₹ 1,000 and insurance prepaid ₹ 800.
(iv) Further Bad-debts ₹ 1,000 and provision for Bad-debts @ 5% on debtors and provision for discount on debtors @ 2%.
(v) Closing Stock ₹ 32,000.
(vi) Depreciation on Building @ 6% p.a.

The accompanying balance sheet and profit and loss account related to SUMO Logistics Pvt. Ltd. Convert these into Common Size Statements.

Previous Year = 2005, Current Year = 2006

Rs’000
	Previous Year	Current Year
Liabilities
Equity Share Capital (of Rs 10 each)	240	240
General Reserve	96	182
Long Term loans	182	169.5
Creditors	67	52
Outstanding expenses	6	-
Other Current liabilities	9	6.5
Total Liabilities	600	650
Assets
Plant assets net of accumulated less depreciation	402	390
Cash	54	78
Debtors	60	65
Inventories	84	117
Total Assets	600	650

Income Statement for the year ended
Rs’000
	Previous Year	Current Year
Gross Sales	370	480
Less : Returns	20	30
Net Sales	350	450
Less : Cost of goods sold	190	215
Gross Profit	160	235
Less : Selling general and administration expenses	50	72
Operating profit	110	163
Less : Interest expenses	20	17
Earnings before tax	90	146
Less : Taxes	45	73
Earnings After Tax	45	73

Q. From the following Trial Balance of Sh. Swamy Narain, prepare Trading and Profit & Loss Account for the year ended 31st March 2018 and a Balance Sheet as at that date :

Dr. Balances	₹	Cr. Balances	₹
Opening Stock	50,000	Capital	20,00,000
Purchases	5,30,000	Sales	12,50,000
General Expenses	45,000	Sundry Creditors	1,36,000
Stationery	6,000	Trade Charges due but not paid	5,000
Wages	2,15,000	Outstanding Rent	4,000
Trade Charges	25,000	Bank Balance	45,000
Rent	44,000
Charity	5,000
Advertisement Expenses	30,000
Carriage on Sales	12,000
Bills Receivables	30,000
Sundry Debtors	2,20,000
Cash Discount	16,000
Cash in Hand	22,000
Furniture	1,00,000
Advance for Furniture	40,000
Plant & Machinery	6,00,000
Building	14,50,000
	34,40,000		34,40,000

Adjustments:
(i) Stock on 31 March, 2018 was valued at ₹ 60,000.
(ii) A new machine was installed during the year costing ₹ 2,00,000 but it was not recorded in the books. Wages paid for its installation ₹ 10,000 have been debited to Wages Account.
(iii) An advance of ₹ 10,000 given alongwith purchase order was wrongly recorded in purchases.
(iv) General expenses include ₹ 20,000 paid for Wages.
(v) Wages include a sum of ₹ 50,000 spent on the erection of a Scooter Stand for employees.
(vi) Advance for Furniture is for furniture at proprietor's residence.
(vii) Depreciate Furniture at 15%, Plant & Machinery at 20% and Building at 10%.
(viii) Carry forward 2/3 of Advertisement Expenses as unexpired.
(ix) A B/R of ₹ 20,000 was discounted with bank on 15 Nov. 2017, but not yet matured.

Q. From the following Trial Balance extracted from the books of S. Sujan Singh, prepare a Trading and Profit & Loss Account for the year ended 31st March, 2016 and a Balance Sheet as at that date:

	Dr. (₹)	Cr. (₹)
Capital Account		90,000
Drawings Account	6,480
Land and Buildings	25,000
Plant & Machinery	14,270
Furniture & Fixtures	1,250
Carriage (Inwards)	4,370
Wages	21,470
Salaries	4,670
Bad-Debts Provision (as on 1st April, 2015)		2,470
Sales		91,230
Sales Returns	1,760
Bank Charges	140
Coal, Gas and Water	720
Rates & Taxes	840
Discount Account (Balance)		120
Purchases	42,160
Purchases Returns		8,460
Bills Receivable	1,270
Trade Expenses	1,990
Sundry Debtors	37,800
Sundry Creditors		12,170
Stock (1st April, 2015)	26,420
Miscellaneous Receipt		500
Fire Insurance	490
Cash at Bank	13,000
Cash in Hand	850
	2,04,950	2,04,950

Adjustments:-
1. Carry forward the following unexpired amounts:-

(i) Fire Insurance	₹ 125
(ii) Rates and Taxes	₹ 240

2. Transfer to Building Account ₹ 3,000 from purchases and ₹ 2,000 from wages, representing cost of material and labour spent on additions to Building made during the year.
3. Charge Depreciation on Land and Buildings at 2.5% and on Plant & Machinery at 10%.
4. Make a Provision of 5% on Sundry Debtors for Bad-debts.
5. Charge 5% Interest on Capital but not on Drawings.
6. The value of Stock as on 31st March, 2016 was ₹ 29,390.

Q. From the following Trial Balance extracted from the books of Sh. Pawan Kumar, prepare a Trading Account, Profit & Loss Account for the year ended 31st March, 2014 and a Balance Sheet as at that date :

Dr. Balances			(₹)	Cr. Balances	(₹)
Drawings			1,20,000	Capital	16,00,000
Plant and Machinery			12,00,000	Creditors	2,60,000
Horses and Carts			2,60,000	Sales	8,20,000
Debtors			3,40,000	Bills Payable	2,21,200
Purchases			2,00,000	Interest on Ram's Loan	1,800
Wages			80,000	Rent Received	12,000
Cash at Bank			2,60,000
Salaries			80,000
Repairs			5,000
Stock (1-4-2013)			7,000
Stock (31-3-2014)			92,000
Rent			45,000
Manufacturing expenses			15,000
Bad-Debts			50,000
Carriage			15,000
Income Tax			20,000
Life Insurance Premium			30,000
Loan to Ram at 12% p.a.			20,000
Insurance			12,000
Insurance Prepaid			1,000
			29,15,000		29,15,000

Adjustments:-
1. Plant and Machinery includes a new machinery purchased on 1st October, 2013 for ₹ 2,00,000.
2. Depreciate Plant and Machinery by 10% p.a. and Horses and Carts by 20% p.a.
3. Salaries for the month of February and March 2014 are outstanding.
4. Goods worth ₹ 15,000 were sold and dispatched on 27th March but no entry was passed to this effect.
5. Make a provision for Doubtful Debts at 5% on Debtors.

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