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M.20 Management Accounting (Section B)—ISC XII

2. Dr. MACHINERY ACCOUNT Cr.
Particulars ` Particulars `
To Balance b/d 20,00,000 By Bank A/c (Sale)* 2,40,000
To Gain (Profit) on Sale of Machinery A/c 60,000 (` 4,00,000 – ` 2,20,000 + ` 60,000)
(Statement of Profit and Loss) By Depreciation A/c 7,00,000
To Bank A/c (Purchase) 18,80,000 By Balance c/d 30,00,000
(Balancing Figure)
39,40,000 39,40,000

*Calculation of Sale Value of Machinery `
Book value on the date of sale 1,80,000
Add: Gain (Profit) on Sale 60,000
Sale Value of Machinery 2,40,000
3. Dr. NON-CURRENT INVESTMENTS ACCOUNT Cr.
Particulars ` Particulars `
To Balance b/d 1,50,000 By Bank A/c (Sale) 60,000
To Gain (Profit) on Sale of Non-current By Balance c/d 2,00,000
Investments A/c (Statement of P & L) 10,000
To Bank A/c (Purchase) 1,00,000
(Balancing Figure)
2,60,000 2,60,000

11. (a) Objectives of Common-size Income Statement:
(i) To analyse change in individual items of Income Statement.
(ii) To determine the trend in different items of Revenue and Expenses.
(b) Cash Equivalents are short-term, highly liquid investments that are readily convertible into
known amounts of cash and which are subject to an insignificant risk of change in value.
(c) (i) Purchase/Sale of Fixed Assets.
(ii) Purchase of Goodwill.
(d) COMMON-SIZE STATEMENT OF PROFIT AND LOSS
for the years ended 31st March, 2020 and 2019
Particulars Absolute Amounts % of Revenue from Operations
31st March, 31st March, 31st March, 31st March,
2020 (`) 2019 (`) 2020 (%) 2019 (%)
I. Revenue from Operations 7,50,000 5,00,000 100 100
II. Other Income 90,000 1,00,000 12 20
III. Total Revenue 8,40,000 6,00,000 112 120
IV. Expenses:
Cost of Materials Consumed 4,50,000 2,50,000 60 50
Other Expenses 75,000 50,000 10 10
Total Expenses 5,25,000 3,00,000 70 60
V. Profit before Tax (III – IV) 3,15,000 3,00,000 42 60
VI. Tax Expense 94,500 90,000 12.6 18
VII. Profit after Tax (V – VI) 2,20,500 2,10,000 29.4 42