Page 43 - MA12
P. 43

3.18                                       Management Accounting (Section B)—ISC XII


                     2. Dr.                         PROVISION FOR TAX ACCOUNT                         Cr.
                     Particulars                        `     Particulars                           `
                     To  Bank A/c (Tax Paid)           60,000   By  Balance b/d                    50,000
                     To  Balance c/d                   65,000   By  Statement of Profit and Loss (Provision) (Bal. Fig.)   75,000
                                                      1,25,000                                    1,25,000
                      3.  Share Issue Expenses written off ` 40,000 will not be taken in Cash Flow from Operating Activities because it is written off
                       from Securities Premium Reserve. It does not affect current year’s profit.
                     4. Dr.                         10% INVESTMENTS ACCOUNT                           Cr.
                     Particulars                        `     Particulars                           `
                     To  Balance b/d                   60,000   By  Bank A/c (Sale) [` 40,000 – ` 10,000 (Loss)]    30,000
                     To  Capital Reserve A/c (Profit)   5,000   By  Capital Reserve A/c (Loss)     10,000
                     To  Bank A/c (Purchases)—Bal. Fig.   1,60,000   By  Bank A/c (Sale)           25,000
                                                               By  Balance c/d                    1,60,000
                                                      2,25,000                                    2,25,000

                      5.  Capital Reserve = ` 5,000 + ` 5,000 – ` 10,000 = Nil.
                                                             Or
                     Dr.                             CAPITAL RESERVE ACCOUNT                          Cr.
                     Particulars                        `     Particulars                           `
                     To  10% Investments A/c           10,000   By  Balance b/d                     5,000
                                                               By  10% Investments A/c              5,000
                                                       10,000                                      10,000

                      6.  As the Profit/Loss on sale of Investments have been transferred to Capital Reserve and not to Statement of Profit and Loss,
                       such Profit/Loss will not be adjusted to calculate Operating Profit.
                     Advanced Level Questions
                     Illustration 11.
                       From the following Balance Sheet of Grow More Ltd., prepare Cash Flow Statement:
                                                         BALANCE SHEET
                     Particulars                                            Note No.   31st March,   31st March,
                                                                                      2020 (`)   2019 (`)
                       I.  EQUITY AND LIABILITIES
                        1.  Shareholders’ Funds
                          (a)  Share Capital                                         10,00,000   8,00,000
                          (b)  Reserves and Surplus                           1       3,00,000   2,10,000
                        2.  Non-Current Liabilities
                          Long-term Borrowings (10% Debentures)                       2,00,000     ...
                       3.  Current Liabilities
                          (a)  Trade Payables                                         7,00,000   8,20,000
                          (b)  Short-term Provisions                          2       1,00,000   70,000
                        Total                                                        23,00,000   19,00,000
                      II.  ASSETS
                        1.  Non-Current Assets
                          (a)  Fixed Assets: Tangible                         3      13,00,000  9,00,000
                          (b)  Non-current Investments                                1,00,000     ...
                        2.  Current Assets
                          (a)  Inventories                                            4,00,000   2,00,000
                          (b)  Trade Receivables                                      5,00,000   7,00,000
                          (c)  Cash and Bank Balances                                   ...     1,00,000
                         Total                                                       23,00,000   19,00,000
                          Note:  Dividend proposed for the years 2018–19 and 2019–20 are ` 2,00,000 and ` 2,50,000 respectively.
   38   39   40   41   42   43   44   45   46   47   48