AccountancyNEB 2080
The following financial transactions were taken from a company. Gross profit Rs. 5,60,000 Share capital Rs. 6,00,000 Rent expenses Rs. 52,000 Salary expenses Rs. 96,000 Other income Rs. 12,000 P & L…
5The following financial transactions were taken from a company. Gross profit Rs. 5,60,000 Share capital Rs. 6,00,000 Rent expenses Rs. 52,000 Salary expenses Rs. 96,000 Other income Rs. 12,000 P & L account Rs. 1,68,000 Fixed assets Rs. 4,00,000 Interest expenses Rs. 12,000 Utility expenses Rs. 22,000 Discount allowed Rs. 14,000 Additional information: a) Depreciation on fixed assets by 15% p.a. b) Transfer to general reserve Rs. 55,000 c) Proposed dividend @ 10% on capital. Required:
- a) Profit & loss account [1]
- b) Profit & loss appropriation account [4]
Answer
a) Profit & Loss Account
| Particulars | Amount (Rs.) |
|---|---|
| Income | |
| Gross Profit | 5,60,000 |
| Other Income | 12,000 |
| Total Income | 5,72,000 |
| Expenses | |
| Salary Expenses | 96,000 |
| Rent Expenses | 52,000 |
| Utility Expenses | 22,000 |
| Interest Expenses | 12,000 |
| Depreciation on Fixed Assets (15%) | 60,000 |
| Discount Allowed | 14,000 |
| Total Expenses | 2,56,000 |
| Net Profit (Transferred to P&L Appropriation A/c) | 3,16,000 |
Calculation of Depreciation: Depreciation = 15% of Fixed Assets = = Rs. 60,000
b) Profit & Loss Appropriation Account
| Particulars | Amount (Rs.) |
|---|---|
| To: | |
| General Reserve | 55,000 |
| Proposed Dividend (10% of Rs. 6,00,000) | 60,000 |
| Total Appropriation | 1,15,000 |
| Balance (Retained Earnings) | 2,01,000 |
| By: | |
| Net Profit (from P&L A/c) | 3,16,000 |
Calculation of Proposed Dividend: Dividend = 10% of Share Capital = = Rs. 60,000
Final Net Profit after Appropriation: Net Profit (P&L A/c) = Rs. 3,16,000 Less: General Reserve (55,000) + Proposed Dividend (60,000) = Rs. 2,01,000 (Retained Earnings)
Discussion
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