Liabilities<\/span><\/p>\n<\/td>\n

2019<\/span><\/p>\n<\/td>\n

2020<\/span><\/p>\n<\/td>\n

Assets<\/span><\/p>\n<\/td>\n

2019<\/span><\/p>\n<\/td>\n

2020<\/span><\/p>\n<\/td>\n<\/tr>\n

Equity share capital <\/span><\/p>\n<\/td>\n

5,00,000<\/span><\/p>\n<\/td>\n

5,00,000<\/span><\/p>\n<\/td>\n

Land and building <\/span><\/p>\n<\/td>\n

4,00,000<\/span><\/p>\n<\/td>\n

4,00,000<\/span><\/p>\n<\/td>\n<\/tr>\n

Sinking fund <\/span><\/p>\n<\/td>\n

30,000<\/span><\/p>\n<\/td>\n

50,000<\/span><\/p>\n<\/td>\n

Plant and machinery<\/span><\/p>\n<\/td>\n

3,05,000<\/span><\/p>\n<\/td>\n

4,70,000<\/span><\/p>\n<\/td>\n<\/tr>\n

Reserve and surplus<\/span><\/p>\n<\/td>\n

75,000<\/span><\/p>\n<\/td>\n

95,000<\/span><\/p>\n<\/td>\n

Trade mark <\/span><\/p>\n<\/td>\n

25,000<\/span><\/p>\n<\/td>\n

15,000<\/span><\/p>\n<\/td>\n<\/tr>\n

10% debenture <\/span><\/p>\n<\/td>\n

1,00,000<\/span><\/p>\n<\/td>\n

150,000<\/span><\/p>\n<\/td>\n

Inventory <\/span><\/p>\n<\/td>\n

20,000<\/span><\/p>\n<\/td>\n

35,000<\/span><\/p>\n<\/td>\n<\/tr>\n

Bank overdraft <\/span><\/p>\n<\/td>\n

50,000<\/span><\/p>\n<\/td>\n

90,000<\/span><\/p>\n<\/td>\n

Account receivable <\/span><\/p>\n<\/td>\n

45,000<\/span><\/p>\n<\/td>\n

20,000<\/span><\/p>\n<\/td>\n<\/tr>\n

Sundry creditors <\/span><\/p>\n<\/td>\n

30,000<\/span><\/p>\n<\/td>\n

20,000<\/span><\/p>\n<\/td>\n

Cash at bank<\/span><\/p>\n<\/td>\n

15,000<\/span><\/p>\n<\/td>\n

5,000<\/span><\/p>\n<\/td>\n<\/tr>\n

Bills payable <\/span><\/p>\n<\/td>\n

20,000<\/span><\/p>\n<\/td>\n

40,000<\/span><\/p>\n<\/td>\n

Prepaid expenses<\/span><\/p>\n<\/td>\n

10,000<\/span><\/p>\n<\/td>\n

15,000<\/span><\/p>\n<\/td>\n<\/tr>\n

Proposed dividend\u00a0 <\/span><\/p>\n<\/td>\n

30,000<\/span><\/p>\n<\/td>\n

25,000<\/span><\/p>\n<\/td>\n

Discount on debenture <\/span><\/p>\n<\/td>\n

15,000<\/span><\/p>\n<\/td>\n

10,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/span><\/p>\n<\/td>\n

8,35,000<\/span><\/p>\n<\/td>\n

9,70,000<\/span><\/p>\n<\/td>\n

\u00a0<\/span><\/p>\n<\/td>\n

8,35,000<\/span><\/p>\n<\/td>\n

9,70,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Additional information: <\/span><\/p>\n

Proposed dividend for the year is Rs 45,000<\/span><\/p>\n

A plant costing Rs 50,000, accumulated depreciation thereon Rs 20,000 was sold for Rs 25,000. <\/span><\/p>\n

Depreciation on plant and machinery for the year was Rs 40,000.<\/span><\/p>\n

Tax paid for the year Rs 25,000 <\/span><\/p>\n

Required:\u00a0 (1) Schedule of charges of working capital; (2) Funds from operation; (3) Funds flow statement<\/span><\/p>\n

\u00a0[Answer:\u00a0 Decrease in WC = Rs 65,000: FFO = Rs 170,000; FFS = Rs 310,000]<\/span><\/i><\/p>\n

* P&M purchase = Rs 235,000; Dividend paid = Rs 50,000<\/span><\/i><\/p>\n

SOLUTION:<\/span><\/b><\/p>\n

Schedule Change in Working Capital<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

\n Particulars<\/span><\/p>\n<\/td>\n	\n 2018<\/span><\/p>\n<\/td>\n	\n 2019<\/span><\/p>\n<\/td>\n	\n Effect in WC<\/span><\/p>\n<\/td>\n<\/tr>\n
\n \u00a0<\/span><\/p>\n<\/td>\n	\n \u00a0<\/span><\/p>\n<\/td>\n	\n \u00a0<\/span><\/p>\n<\/td>\n	\n Increase<\/span><\/p>\n<\/td>\n	\n Decrease<\/span><\/p>\n<\/td>\n<\/tr>\n
\n Current assets: <\/span><\/b><\/p>\n<\/td>\n	\n –<\/span><\/p>\n<\/td>\n	\n –<\/span><\/p>\n<\/td>\n	\n –<\/span><\/p>\n<\/td>\n	\n –<\/span><\/p>\n<\/td>\n<\/tr>\n
\n Inventory <\/span><\/p>\n<\/td>\n	\n 20,000<\/span><\/p>\n<\/td>\n	\n 35,000<\/span><\/p>\n<\/td>\n	\n 15,000<\/span><\/p>\n<\/td>\n	\n –<\/span><\/p>\n<\/td>\n<\/tr>\n
\n Account receivable <\/span><\/p>\n<\/td>\n	\n 45,000<\/span><\/p>\n<\/td>\n	\n 20,000<\/span><\/p>\n<\/td>\n	\n –<\/span><\/p>\n<\/td>\n	\n 25,000<\/span><\/p>\n<\/td>\n<\/tr>\n
\n Cash at bank<\/span><\/p>\n<\/td>\n	\n 15,000<\/span><\/p>\n<\/td>\n	\n 5,000<\/span><\/p>\n<\/td>\n	\n –<\/span><\/p>\n<\/td>\n	\n 10,000<\/span><\/p>\n<\/td>\n<\/tr>\n
\n Prepaid expenses<\/span><\/p>\n<\/td>\n	\n 10,000<\/span><\/p>\n<\/td>\n	\n 15,000<\/span><\/p>\n<\/td>\n	\n 5,000<\/span><\/p>\n<\/td>\n	\n –<\/span><\/p>\n<\/td>\n<\/tr>\n
\n A <\/span><\/b><\/p>\n<\/td>\n	\n 90,000<\/span><\/p>\n<\/td>\n	\n 75,000<\/span><\/p>\n<\/td>\n	\n \u00a0<\/span><\/p>\n<\/td>\n	\n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n
\n Current liabilities:\u00a0 <\/span><\/b><\/p>\n<\/td>\n	\n –<\/span><\/p>\n<\/td>\n	\n –<\/span><\/p>\n<\/td>\n	\n \u00a0<\/span><\/p>\n<\/td>\n	\n –<\/span><\/p>\n<\/td>\n<\/tr>\n
\n Bank overdraft <\/span><\/p>\n<\/td>\n	\n 50,000<\/span><\/p>\n<\/td>\n	\n 90,000<\/span><\/p>\n<\/td>\n	\n \u00a0<\/span><\/p>\n<\/td>\n	\n 40,000<\/span><\/p>\n<\/td>\n<\/tr>\n
\n Sundry creditors <\/span><\/p>\n<\/td>\n	\n 30,000<\/span><\/p>\n<\/td>\n	\n 20,000<\/span><\/p>\n<\/td>\n	\n 10,000<\/span><\/p>\n<\/td>\n	\n –<\/span><\/p>\n<\/td>\n<\/tr>\n
\n Bills payable <\/span><\/p>\n<\/td>\n	\n 20,000<\/span><\/p>\n<\/td>\n	\n 40,000<\/span><\/p>\n<\/td>\n	\n \u00a0<\/span><\/p>\n<\/td>\n	\n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n
\n B<\/span><\/b><\/p>\n<\/td>\n	\n 100,000<\/span><\/p>\n<\/td>\n	\n 150,000<\/span><\/p>\n<\/td>\n	\n \u00a0<\/span><\/p>\n<\/td>\n	\n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n
\n Change in working capital (A-B)<\/span><\/p>\n<\/td>\n	\n (10,000)<\/span><\/p>\n<\/td>\n	\n (75,000)<\/span><\/p>\n<\/td>\n	\n 30,000<\/span><\/p>\n<\/td>\n	\n 95,000<\/span><\/p>\n<\/td>\n<\/tr>\n
\n Decrease in working capital <\/span><\/p>\n<\/td>\n	\n \u00a0<\/span><\/p>\n<\/td>\n	\n 65,000<\/span><\/p>\n<\/td>\n	\n 65,000<\/span><\/p>\n<\/td>\n	\n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n
\n Total <\/span><\/p>\n<\/td>\n	\n (10,000)<\/span><\/p>\n<\/td>\n	\n (10,000)<\/span><\/p>\n<\/td>\n	\n 95,000<\/span><\/p>\n<\/td>\n	\n 95,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Profit and Loss Adjustment Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Particulars<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Net profit (95,000 \u2013 75,000)<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n By Operating profit (FFO)<\/span><\/p>\n<\/td>\n \n 170,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Transfer to sinking fund\u00a0\u00a0 \u00a0<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Trade mark written off<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Discount on debenture written off<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Proposed dividend <\/span><\/p>\n<\/td>\n \n 45,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Depreciation <\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Loss on sale of plant <\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Tax paid <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 170,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 170,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Funds Flow Statement<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n \n Sources<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Uses<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n<\/tr>\n \n Issue of debenture <\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n Purchase of plant and machine<\/span><\/p>\n<\/td>\n \n 2,35,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Funds from operation\u00a0 <\/span><\/p>\n<\/td>\n \n 1,70,000<\/span><\/p>\n<\/td>\n \n Tax paid<\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Decrease in working capital <\/span><\/p>\n<\/td>\n \n 65,000<\/span><\/p>\n<\/td>\n \n Dividend paid <\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Sales of plant and machinery \u00a0<\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 3,10,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 3,10,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Given and working note: <\/span><\/i><\/p>\n Proposed Dividend Account<\/span><\/i><\/p>\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Bank (dividend paid, outflow, b\/f) <\/span><\/i><\/p>\n<\/td>\n \n 50,000<\/span><\/i><\/p>\n<\/td>\n \n By Opening balance\u00a0 <\/span><\/i><\/p>\n<\/td>\n \n 30,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Closing balance\u00a0 <\/span><\/i><\/p>\n<\/td>\n \n 25,000<\/span><\/i><\/p>\n<\/td>\n \n By P&L adjustment<\/span><\/i><\/p>\n<\/td>\n \n 45,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 75,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 75,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Plant and Machinery Account<\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n \n Particulars\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Opening balance <\/span><\/i><\/p>\n<\/td>\n \n 3,05,000<\/span><\/i><\/p>\n<\/td>\n \n By Bank (sold, inflow)\u00a0 <\/span><\/i><\/p>\n<\/td>\n \n 25,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Bank (purchase, outflow, b\/f) <\/span><\/i><\/p>\n<\/td>\n \n 2,35,000<\/span><\/i><\/p>\n<\/td>\n \n By Depreciation (P&L adjustment)<\/span><\/i><\/p>\n<\/td>\n \n 40,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n By Profit and loss (loss)<\/span><\/i><\/p>\n<\/td>\n \n 5,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n By Closing balance\u00a0 <\/span><\/i><\/p>\n<\/td>\n \n 4,70,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 5,40,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 5,40,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n .<\/span><\/i><\/p>\n\n\n\n\n\n \n Accumulated depreciation<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/p>\n<\/td>\n \n Original cost \u2013 Book salvage value<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n 20,000<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/p>\n<\/td>\n \n 50,000 \u2013 Book salvage value<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n Book salvage value<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Again, <\/span><\/i><\/p>\n Loss <\/span><\/i>= <\/span>Book salvage value \u2013 Cash salvage value \u00a0\u00a0\u00a0\u00a0 = 30,000 \u2013 25,000 \u00a0\u00a0\u00a0\u00a0\u00a0 = Rs 5,000<\/span><\/i><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n PROBLEM: 8<\/span><\/b><\/p>\n The following is the balance sheet of BXC Company Ltd for two fiscal years: <\/span><\/p>\n Balance Sheet<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n \n Liabilities<\/span><\/p>\n<\/td>\n \n 2019<\/span><\/p>\n<\/td>\n \n 2020<\/span><\/p>\n<\/td>\n \n Assets <\/span><\/p>\n<\/td>\n \n 2019<\/span><\/p>\n<\/td>\n \n 2020<\/span><\/p>\n<\/td>\n<\/tr>\n \n Equity share capital <\/span><\/p>\n<\/td>\n \n 5,00,000<\/span><\/p>\n<\/td>\n \n 10,00,000<\/span><\/p>\n<\/td>\n \n Land and building <\/span><\/p>\n<\/td>\n \n 4,00,000<\/span><\/p>\n<\/td>\n \n 7,00,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Reserve fund <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n 55,000<\/span><\/p>\n<\/td>\n \n Plant and machinery<\/span><\/p>\n<\/td>\n \n 95,000<\/span><\/p>\n<\/td>\n \n 4,57,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Retained earning <\/span><\/p>\n<\/td>\n \n 80,000<\/span><\/p>\n<\/td>\n \n 1,20,000<\/span><\/p>\n<\/td>\n \n Inventory <\/span><\/p>\n<\/td>\n \n 1,50,000<\/span><\/p>\n<\/td>\n \n 1,75,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n 5% debenture <\/span><\/p>\n<\/td>\n \n 2,00,000<\/span><\/p>\n<\/td>\n \n 3,50,000<\/span><\/p>\n<\/td>\n \n Debtors<\/span><\/p>\n<\/td>\n \n 1,75,000<\/span><\/p>\n<\/td>\n \n 90,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Sundry creditors <\/span><\/p>\n<\/td>\n \n 1,00,000<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n Cash at bank<\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n \n 1,25,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Bills payable <\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n 70,000<\/span><\/p>\n<\/td>\n \n Prepaid expenses<\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Provision for bad debts\u00a0 <\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n 7,000<\/span><\/p>\n<\/td>\n \n Preliminary expenses <\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 960,000<\/span><\/p>\n<\/td>\n \n 16,42,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 960,000<\/span><\/p>\n<\/td>\n \n 16,42,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Additional information <\/span><\/p>\n Net profit earned for the year Rs 65,000.<\/span><\/p>\n A plant purchase price of Rs 50,000, accumulated depreciation thereon Rs 20,000, was sold for Rs 35,000. Depreciation for the year is Rs 40,000.<\/span><\/p>\n Tax paid for the year Rs 20,000. <\/span><\/p>\n Required:\u00a0 (1) Schedule of charges of working capital; (2) Funds from operation; (3) Funds flow statement<\/span><\/p>\n [Answer:\u00a0 Increase in WC = Rs 78,000: FFO = Rs 170,000; FFS = Rs 855,000]<\/span><\/i><\/p>\n * P&M purchase = Rs 432,000; Dividend paid = Rs 25,000<\/span><\/i><\/p>\n SOLUTION: <\/span><\/b><\/p>\n Schedule Change in Working Capital<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars<\/span><\/p>\n<\/td>\n \n 2019<\/span><\/p>\n<\/td>\n \n 2020<\/span><\/p>\n<\/td>\n \n Effect in WC<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Increase<\/span><\/p>\n<\/td>\n \n Decrease<\/span><\/p>\n<\/td>\n<\/tr>\n \n Current assets: <\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Inventory <\/span><\/p>\n Debtors<\/span><\/p>\n<\/td>\n \n 1.50,000<\/span><\/p>\n 1,75,000<\/span><\/p>\n<\/td>\n \n 1,75,000<\/span><\/p>\n 90,000<\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n –<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n 85,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Cash at bank<\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n \n 1,25,000<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n<\/tr>\n \n Prepaid expenses<\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n<\/tr>\n \n A <\/span><\/b><\/p>\n<\/td>\n \n 4,25,000<\/span><\/p>\n<\/td>\n \n 4,65,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Current liabilities:\u00a0 <\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Sundry creditors <\/span><\/p>\n<\/td>\n \n 1,00,000<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n 60,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n<\/tr>\n \n Bills payable <\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n 70,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Provision for bad debts\u00a0 <\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n 7,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n 2,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n B<\/span><\/b><\/p>\n<\/td>\n \n 155,000<\/span><\/p>\n<\/td>\n \n 117,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Change in working capital (A-B)<\/span><\/p>\n<\/td>\n \n 270,000<\/span><\/p>\n<\/td>\n \n 348,000<\/span><\/p>\n<\/td>\n \n 185,000<\/span><\/p>\n<\/td>\n \n 107,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Increase in working capital <\/span><\/p>\n<\/td>\n \n 78,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 78,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Total <\/span><\/p>\n<\/td>\n \n 348,000<\/span><\/p>\n<\/td>\n \n 348,000<\/span><\/p>\n<\/td>\n \n 185,000<\/span><\/p>\n<\/td>\n \n 185,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n \u00a0<\/span><\/b><\/p>\n Profit and Loss Adjustment Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n \n Particulars<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Particulars<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Net profit for the year <\/span><\/p>\n<\/td>\n \n 65,000<\/span><\/p>\n<\/td>\n \n By Profit on sale of plant<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Transfer to reserve fund <\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n \n By Operating profit (FFO)<\/span><\/p>\n<\/td>\n \n 1,70,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Preliminary expenses\u00a0 written off <\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Depreciation <\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Tax paid <\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 1,75,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 1,75,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Funds Flow Statement<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n \n Inflow or sources<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Outflow or uses<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n<\/tr>\n \n Issue of equity share <\/span><\/p>\n<\/td>\n \n 5,00,000<\/span><\/p>\n<\/td>\n \n Purchase of land and building <\/span><\/p>\n<\/td>\n \n 3,00,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Issue of debenture <\/span><\/p>\n<\/td>\n \n 1,50,000<\/span><\/p>\n<\/td>\n \n Purchase of plant and machine<\/span><\/p>\n<\/td>\n \n 432,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Funds from operation\u00a0 <\/span><\/p>\n<\/td>\n \n 1,70,000<\/span><\/p>\n<\/td>\n \n Tax paid<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Plant sold <\/span><\/p>\n<\/td>\n \n 35,000<\/span><\/p>\n<\/td>\n \n Dividend paid <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Increase in working capital <\/span><\/p>\n<\/td>\n \n 78,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 8,55,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 855,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Given and working note: <\/span><\/i><\/p>\n Retained Earnings Account<\/span><\/i><\/p>\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Bank (dividend paid, outflow, b\/f)\u00a0\u00a0 <\/span><\/i><\/p>\n<\/td>\n \n 25,000<\/span><\/i><\/p>\n<\/td>\n \n By Opening balance <\/span><\/i><\/p>\n<\/td>\n \n 80,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Closing balance\u00a0 <\/span><\/i><\/p>\n<\/td>\n \n 1,20,000<\/span><\/i><\/p>\n<\/td>\n \n By Net profit (P&L adjustment) <\/span><\/i><\/p>\n<\/td>\n \n 65,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 1,45,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 145,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/p>\n Plant and Machinery Account<\/span><\/i><\/p>\n\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Opening balance <\/span><\/i><\/p>\n<\/td>\n \n 95,000<\/span><\/i><\/p>\n<\/td>\n \n By Bank (sold, inflow)\u00a0 <\/span><\/i><\/p>\n<\/td>\n \n 34,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Profit on sold <\/span><\/i><\/p>\n<\/td>\n \n 5,000<\/span><\/i><\/p>\n<\/td>\n \n By Depreciation <\/span><\/i><\/p>\n<\/td>\n \n 40,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Bank (purchase, outflow b\/f) <\/span><\/i><\/p>\n<\/td>\n \n 4,32,000<\/span><\/i><\/p>\n<\/td>\n \n By Closing balance <\/span><\/i><\/p>\n<\/td>\n \n 4,57,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 5,32,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 5,32,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Keep in Mind (KIM) <\/span><\/b><\/p>\n\n\n\n\n\n \n When net profit is given in additional information, dividend paid is to be calculated from retained earning account.<\/span><\/p>\n<\/td>\n<\/tr>\n \n Retained earnings, profit and loss credit balance, reserve and surplus are equivalent in fund flow statement.<\/span><\/p>\n<\/td>\n<\/tr>\n \n Net profit of additional information is recorded in two times, firstly on credit side of retained earning account and secondly on debit side of profit and loss adjustment account.<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n PROBLEM: 9<\/span><\/b><\/p>\n The following were the comparative balance sheet of ABC Company Ltd: <\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n \n Liabilities<\/span><\/p>\n<\/td>\n \n 1 Jan<\/span><\/p>\n<\/td>\n \n 31 Dec<\/span><\/p>\n<\/td>\n \n Assets <\/span><\/p>\n<\/td>\n \n 1 Jan<\/span><\/p>\n<\/td>\n \n 31 Dec<\/span><\/p>\n<\/td>\n<\/tr>\n \n Share capital <\/span><\/p>\n<\/td>\n \n 60,000<\/span><\/p>\n<\/td>\n \n 1,00,000<\/span><\/p>\n<\/td>\n \n Land and building <\/span><\/p>\n<\/td>\n \n 1,99,000<\/span><\/p>\n<\/td>\n \n 3,00,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Retained earning\u00a0 <\/span><\/p>\n<\/td>\n \n 2,10,000<\/span><\/p>\n<\/td>\n \n 2,20,000<\/span><\/p>\n<\/td>\n \n Plant and machinery<\/span><\/p>\n<\/td>\n \n 2,55,000<\/span><\/p>\n<\/td>\n \n 2,77,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Share premium <\/span><\/p>\n<\/td>\n \n 1,00,000<\/span><\/p>\n<\/td>\n \n 1,55,000<\/span><\/p>\n<\/td>\n \n Advance payment <\/span><\/p>\n<\/td>\n \n 12,000<\/span><\/p>\n<\/td>\n \n 24,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Long term loan <\/span><\/p>\n<\/td>\n \n 1,84,000<\/span><\/p>\n<\/td>\n \n 1,10,000<\/span><\/p>\n<\/td>\n \n Stock <\/span><\/p>\n<\/td>\n \n 120,000<\/span><\/p>\n<\/td>\n \n 2,00,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n 6% debenture <\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n 1,70,000<\/span><\/p>\n<\/td>\n \n Debtors <\/span><\/p>\n<\/td>\n \n 80,000<\/span><\/p>\n<\/td>\n \n 1,00,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Account payable\u00a0 <\/span><\/p>\n<\/td>\n \n 90,000<\/span><\/p>\n<\/td>\n \n 1,44,000<\/span><\/p>\n<\/td>\n \n Cash at bank<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Expenses payable <\/span><\/p>\n<\/td>\n \n 42,000<\/span><\/p>\n<\/td>\n \n 22,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 7,06,000<\/span><\/p>\n<\/td>\n \n 9,21,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 7,06,000<\/span><\/p>\n<\/td>\n \n 9,21,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Additional information: <\/span><\/p>\n Net income for the period amounted to Rs 70,000<\/span><\/p>\n Depreciation on plant and equipment charged during the year Rs 68,000<\/span><\/p>\n Stock dividend for Rs 30,000 has been declared<\/span><\/p>\n Cash dividend of Rs 30,000 were declared and paid<\/span><\/p>\n 100 shares of Rs 100 each were issued for Rs 65,000. <\/span><\/p>\n Required:\u00a0 (1) Schedule of charges of working capital; (2) Funds from operation; (3) Funds flow statement<\/span><\/p>\n [Answer:\u00a0 Decrease in WC = Rs 58,000: FFO = Rs 138,000; FFS = Rs 353,000]<\/span><\/i><\/p>\n Stock dividend Rs 30,000 is debited only in P&L Appn<\/sup>;<\/span><\/i><\/p>\n No entry for net profit of information. <\/span><\/i><\/p>\n Net profit from retained earning = Rs 10,000;<\/span><\/i><\/p>\n SOLUTION:\u00a0 <\/span><\/b><\/p>\n Schedule Change in Working Capital<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars<\/span><\/p>\n<\/td>\n \n 1 Jan<\/span><\/p>\n<\/td>\n \n 31 Dec<\/span><\/p>\n<\/td>\n \n Effect in WC<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Increase<\/span><\/p>\n<\/td>\n \n Decrease<\/span><\/p>\n<\/td>\n<\/tr>\n \n Current assets: <\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Advance payment <\/span><\/p>\n<\/td>\n \n 12,000<\/span><\/p>\n<\/td>\n \n 24,000<\/span><\/p>\n<\/td>\n \n 12,000<\/span><\/p>\n<\/td>\n \n \u2212<\/span><\/p>\n<\/td>\n<\/tr>\n \n Stock <\/span><\/p>\n<\/td>\n \n 120,000<\/span><\/p>\n<\/td>\n \n 2,00,000<\/span><\/p>\n<\/td>\n \n 80,000<\/span><\/p>\n<\/td>\n \n \u2212<\/span><\/p>\n<\/td>\n<\/tr>\n \n Debtors <\/span><\/p>\n<\/td>\n \n 80,000<\/span><\/p>\n<\/td>\n \n 1,00,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n \u2212<\/span><\/p>\n<\/td>\n<\/tr>\n \n Cash at bank<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n \u2212<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n A <\/span><\/b><\/p>\n<\/td>\n \n 252,000<\/span><\/p>\n<\/td>\n \n 344,000<\/span><\/p>\n<\/td>\n \n \u2212<\/span><\/p>\n<\/td>\n \n \u2212<\/span><\/p>\n<\/td>\n<\/tr>\n \n Current liabilities:\u00a0 <\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Account payable\u00a0 <\/span><\/p>\n<\/td>\n \n 90,000<\/span><\/p>\n<\/td>\n \n 1,44,000<\/span><\/p>\n<\/td>\n \n \u2212<\/span><\/p>\n<\/td>\n \n 54,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Outstanding expenses <\/span><\/p>\n<\/td>\n \n 42,000<\/span><\/p>\n<\/td>\n \n 22,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n \u2212<\/span><\/p>\n<\/td>\n<\/tr>\n \n B <\/span><\/b><\/p>\n<\/td>\n \n 132,000<\/span><\/p>\n<\/td>\n \n 166,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Net change working capital (A \u2212 B)<\/span><\/p>\n<\/td>\n \n 120,000<\/span><\/p>\n<\/td>\n \n 178,000<\/span><\/p>\n<\/td>\n \n 132,000<\/span><\/p>\n<\/td>\n \n 74,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Increase in working capital <\/span><\/p>\n<\/td>\n \n 58,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 58,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Total<\/span><\/p>\n<\/td>\n \n 178,000<\/span><\/p>\n<\/td>\n \n 178,000<\/span><\/p>\n<\/td>\n \n 132,000<\/span><\/p>\n<\/td>\n \n 132,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Profit and Loss Adjustment Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n \n Particulars<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Particulars\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Net profit <\/span><\/p>\n<\/td>\n \n \u2212<\/span><\/p>\n<\/td>\n \n By Operating profit (FFO)<\/span><\/p>\n<\/td>\n \n 138,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n (retained earnings 220,000 \u2013 210,000)<\/span><\/i><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Depreciation\u00a0 on P&M<\/span><\/p>\n<\/td>\n \n 68,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Stock dividend (shares)<\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Cash dividend <\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 138,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 138,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Funds Flow Statement<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n \n Inflow or sources\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Outflow or uses<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n<\/tr>\n \n Funds from operation\u00a0 <\/span><\/p>\n<\/td>\n \n 138,000<\/span><\/p>\n<\/td>\n \n Cash dividend paid <\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Issue of shares (for cash)<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n Increase in working capital <\/span><\/p>\n<\/td>\n \n 58,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Share premium <\/span><\/p>\n<\/td>\n \n 55,000<\/span><\/p>\n<\/td>\n \n Purchase of land and building <\/span><\/p>\n<\/td>\n \n 101,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Issue of debenture <\/span><\/p>\n<\/td>\n \n 150,000<\/span><\/p>\n<\/td>\n \n Purchase of plant and machine<\/span><\/p>\n<\/td>\n \n 90,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Repayment of long term loan\u00a0 <\/span><\/p>\n<\/td>\n \n 74,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 353,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 353,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Given and working note: <\/span><\/i><\/p>\n Plant and Machinery Account<\/span><\/i><\/p>\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Opening balance <\/span><\/i><\/p>\n<\/td>\n \n 2,55,000<\/span><\/i><\/p>\n<\/td>\n \n By Depn (P&L adjustment)<\/span><\/i><\/p>\n<\/td>\n \n 68,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Bank (purchase, b\/f) <\/span><\/i><\/p>\n<\/td>\n \n 90,000<\/span><\/i><\/p>\n<\/td>\n \n By Closing balance <\/span><\/i><\/p>\n<\/td>\n \n 2,77,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 345,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 345,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Retained Earnings Account\u00a0 <\/span><\/i><\/p>\n\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Stock dividend <\/span><\/i><\/p>\n<\/td>\n \n 30,000<\/span><\/i><\/p>\n<\/td>\n \n By Opening balance <\/span><\/i><\/p>\n<\/td>\n \n 210,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Cash dividend (uses) <\/span><\/i><\/p>\n<\/td>\n \n 30,000<\/span><\/i><\/p>\n<\/td>\n \n By Net profit <\/span><\/i><\/p>\n<\/td>\n \n 70,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Closing balance <\/span><\/i><\/p>\n<\/td>\n \n 220,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 280,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 280,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Share Capital Account<\/span><\/i><\/p>\n\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u2212<\/span><\/i><\/p>\n<\/td>\n \n By Opening balance <\/span><\/i><\/p>\n<\/td>\n \n 60,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u2212<\/span><\/i><\/p>\n<\/td>\n \n By Stock dividend <\/span><\/i><\/p>\n<\/td>\n \n 30,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Closing balance <\/span><\/i><\/p>\n<\/td>\n \n 100,000<\/span><\/i><\/p>\n<\/td>\n \n By Bank (issue for cash)\u00a0 <\/span><\/i><\/p>\n<\/td>\n \n 10,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 100,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 100,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n \u00a0<\/span><\/i><\/p>\n Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n PROBLEM: 10<\/span><\/b><\/p>\n The following is the balance sheet of BHS Company Ltd for two fiscal years:<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n \n Liabilities<\/span><\/p>\n<\/td>\n \n 2019<\/span><\/p>\n<\/td>\n \n 2020<\/span><\/p>\n<\/td>\n \n Assets <\/span><\/p>\n<\/td>\n \n 2019<\/span><\/p>\n<\/td>\n \n 2020<\/span><\/p>\n<\/td>\n<\/tr>\n \n Share capital <\/span><\/p>\n<\/td>\n \n 5,00,000<\/span><\/p>\n<\/td>\n \n 7,50,000<\/span><\/p>\n<\/td>\n \n Land and building <\/span><\/p>\n<\/td>\n \n 4,25,000<\/span><\/p>\n<\/td>\n \n 6,25,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n General reserve <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n Plant and machinery<\/span><\/p>\n<\/td>\n \n 2,00,000<\/span><\/p>\n<\/td>\n \n 3,00,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Retained earnings account\u00a0 <\/span><\/p>\n<\/td>\n \n 1,50,000<\/span><\/p>\n<\/td>\n \n 1,75,000<\/span><\/p>\n<\/td>\n \n Stock <\/span><\/p>\n<\/td>\n \n 1,50,000<\/span><\/p>\n<\/td>\n \n 1,25,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n 5% Debenture <\/span><\/p>\n<\/td>\n \n 2,00,000<\/span><\/p>\n<\/td>\n \n 1,50,000<\/span><\/p>\n<\/td>\n \n Account receivable <\/span><\/p>\n<\/td>\n \n 1,25,000<\/span><\/p>\n<\/td>\n \n 90,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Sundry creditors <\/span><\/p>\n<\/td>\n \n 80,000<\/span><\/p>\n<\/td>\n \n 60,000<\/span><\/p>\n<\/td>\n \n Cash at bank<\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n \n 1,25,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Bills payable <\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n 70,000<\/span><\/p>\n<\/td>\n \n Cash in hand<\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n 15,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Accumulated depreciation\u00a0\u00a0 <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n 45,000<\/span><\/p>\n<\/td>\n \n Underwriting commission <\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 10,30,000<\/span><\/p>\n<\/td>\n \n 13,00,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 10,30,000<\/span><\/p>\n<\/td>\n \n 13,00,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Additional information<\/span>: <\/span><\/p>\n Net profit for the year Rs 120,000.<\/span><\/p>\n Shares worth Rs 50,000 were issued for dividend.<\/span><\/p>\n A plant costing Rs 100,000 with accumulated depreciation Rs 50,000 was sold for Rs 60,000. <\/span><\/p>\n Cash dividend paid Rs 45,000 and interim dividend paid Rs 25,000. <\/i><\/span><\/p>\n Required:\u00a0 (1) Schedule of charges of working capital; (2) Funds from operation; (3) Funds flow statement<\/span><\/p>\n \u00a0[Answer: Decrease in working capital = Rs 20,000; FFO = Rs 240,000; <\/span><\/i><\/p>\n Total FFS = Rs 520,000; Depn = Rs 70,000; Fixed assets purchase = Rs 200,000; <\/span><\/i><\/p>\n SOLUTION:\u00a0 <\/span><\/b><\/p>\n Schedule Change in Working Capital<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars<\/span><\/p>\n<\/td>\n \n 2019<\/span><\/p>\n<\/td>\n \n 2020<\/span><\/p>\n<\/td>\n \n Effect in working capital<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Increase<\/span><\/p>\n<\/td>\n \n Decrease<\/span><\/p>\n<\/td>\n<\/tr>\n \n Current assets: <\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Stock <\/span><\/p>\n<\/td>\n \n 1,50,000<\/span><\/p>\n<\/td>\n \n 1,25,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Account receivable <\/span><\/p>\n<\/td>\n \n 1,25,000<\/span><\/p>\n<\/td>\n \n 90,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n 35,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Cash at bank<\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n \n 1,25,000<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n<\/tr>\n \n Cash in hand <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n 15,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n A <\/span><\/b><\/p>\n<\/td>\n \n 3,75,000<\/span><\/p>\n<\/td>\n \n 3,55,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Current liabilities:\u00a0 <\/span><\/b><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n<\/tr>\n \n Sundry creditors <\/span><\/p>\n<\/td>\n \n 80,000<\/span><\/p>\n<\/td>\n \n 60,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n<\/tr>\n \n Bills payable <\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n 70,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n B<\/span><\/b><\/p>\n<\/td>\n \n 1,30,000<\/span><\/p>\n<\/td>\n \n 1,30,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Change in working capital (A \u2212 B)<\/span><\/p>\n<\/td>\n \n 2,45,000<\/span><\/p>\n<\/td>\n \n 2,25,000<\/span><\/p>\n<\/td>\n \n 70,000<\/span><\/p>\n<\/td>\n \n 90,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Decrease in working capital <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Total <\/span><\/p>\n<\/td>\n \n 2,45,000<\/span><\/p>\n<\/td>\n \n 2,45,000<\/span><\/p>\n<\/td>\n \n 90,000<\/span><\/p>\n<\/td>\n \n 90,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Profit and Loss Adjustment Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n \n Particulars<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Particulars\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Net profit <\/span><\/p>\n<\/td>\n \n 1,20,000<\/span><\/p>\n<\/td>\n \n By Profit on sale of plant <\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Transfer to general reserve <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n By Operating profit (FFO)<\/span><\/p>\n<\/td>\n \n 2,40,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Underwriting commission written off <\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Depreciation <\/span><\/p>\n<\/td>\n \n 70,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Interim dividend paid <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 2,50,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 2,50,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Funds Flow Statement<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n \n Sources<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Uses<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n<\/tr>\n \n Issue of share for cash<\/span><\/p>\n<\/td>\n \n 2,00,000<\/span><\/p>\n<\/td>\n \n Redemption of debenture <\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Funds from operation\u00a0 <\/span><\/p>\n<\/td>\n \n 2,40,000<\/span><\/p>\n<\/td>\n \n Purchase of land and building <\/span><\/p>\n<\/td>\n \n 2,00,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Plant sold <\/span><\/p>\n<\/td>\n \n 60,000<\/span><\/p>\n<\/td>\n \n Purchase of plant and machine<\/span><\/p>\n<\/td>\n \n 2,00,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Decrease in working capital <\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n Interim dividend paid <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Cash dividend <\/span><\/p>\n<\/td>\n \n 45,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 5,20,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 5,20,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n Keep in Mind (KIM) <\/span><\/b><\/p>\n\n\n\n\n\n \n When interim dividend and cash dividend are given in adjustment:<\/span><\/p>\n<\/td>\n<\/tr>\n \n Interim dividend recorded in two places viz debited in P&L adjustment account and outflow of FFS.<\/span><\/p>\n<\/td>\n<\/tr>\n \n But cash is dividend only in outflow of FFS.<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Given and working note: <\/span><\/i><\/p>\n Accumulated Depreciation Account<\/span><\/i><\/p>\n\n\n\n\n\n\n \n Particulars\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Depreciation on sales <\/span><\/i><\/p>\n<\/td>\n \n 50,000*<\/span><\/i><\/p>\n<\/td>\n \n By Opening balance <\/span><\/i><\/p>\n<\/td>\n \n 25,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Closing balance\u00a0 <\/span><\/i><\/p>\n<\/td>\n \n 45,000<\/span><\/i><\/p>\n<\/td>\n \n By Depn for the year\u00a0 (P&L adj, b\/f) <\/span><\/i><\/p>\n<\/td>\n \n 70,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 95,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 95,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Plant and Machinery Account<\/span><\/i><\/p>\n\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Opening balance <\/span><\/i><\/p>\n<\/td>\n \n 2,00,000<\/span><\/i><\/p>\n<\/td>\n \n By Bank (sold, inflow)\u00a0 <\/span><\/i><\/p>\n<\/td>\n \n 60,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Profit and loss (profit)<\/span><\/i><\/p>\n<\/td>\n \n 10,000<\/span><\/i><\/p>\n<\/td>\n \n By Depreciation on sales <\/span><\/i><\/p>\n<\/td>\n \n 50,000*<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Bank (purchase, outflow, b\/f) <\/span><\/i><\/p>\n<\/td>\n \n 2,00,000<\/span><\/i><\/p>\n<\/td>\n \n By Closing balance <\/span><\/i><\/p>\n<\/td>\n \n 3,00,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 4,10,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 4,10,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Retained Earnings Account<\/span><\/i><\/p>\n\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Stock dividend paid <\/span><\/i><\/p>\n<\/td>\n \n 50,000#<\/sup><\/span><\/i><\/p>\n<\/td>\n \n By Opening balance <\/span><\/i><\/p>\n<\/td>\n \n 1,50,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Cash dividend paid (outflow) <\/span><\/i><\/p>\n<\/td>\n \n 45,000<\/span><\/i><\/p>\n<\/td>\n \n By Net profit (P&L adjustment) <\/span><\/i><\/p>\n<\/td>\n \n 1,20.000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Closing balance\u00a0 <\/span><\/i><\/p>\n<\/td>\n \n 1,75,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 2,70,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 270,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Share Capital Account<\/span><\/i><\/p>\n\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Closing balance <\/span><\/i><\/p>\n<\/td>\n \n 7,50,000<\/span><\/i><\/p>\n<\/td>\n \n By Opening balance <\/span><\/i><\/p>\n<\/td>\n \n 5,00,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n By Stock dividend <\/span><\/i><\/p>\n<\/td>\n \n 50,000#<\/sup><\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n By Issue of share (cash inflow)<\/span><\/i><\/p>\n<\/td>\n \n 2,00,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 7,50,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 7,50,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n \u00a0<\/span><\/p>\n Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n PROBLEM: 11<\/span><\/b><\/p>\n The following is the balance sheet of XYZ Company Ltd for two fiscal years:<\/span><\/p>\n Balance Sheet<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n \n Liabilities<\/span><\/p>\n<\/td>\n \n 2019<\/span><\/p>\n<\/td>\n \n 2020<\/span><\/p>\n<\/td>\n \n Assets <\/span><\/p>\n<\/td>\n \n 2019<\/span><\/p>\n<\/td>\n \n 2020<\/span><\/p>\n<\/td>\n<\/tr>\n \n Share capital <\/span><\/p>\n<\/td>\n \n 5,00,000<\/span><\/p>\n<\/td>\n \n 5,00,000<\/span><\/p>\n<\/td>\n \n Fixed assets <\/span><\/p>\n<\/td>\n \n 6,25,000<\/span><\/p>\n<\/td>\n \n 6,40,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n General reserve <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n Investment <\/span><\/p>\n<\/td>\n \n 1.50,000<\/span><\/p>\n<\/td>\n \n 1,25,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Profit and loss account <\/span><\/p>\n<\/td>\n \n 1,50,000<\/span><\/p>\n<\/td>\n \n 1,75,000<\/span><\/p>\n<\/td>\n \n Stock <\/span><\/p>\n<\/td>\n \n 1,25,000<\/span><\/p>\n<\/td>\n \n 90,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n 10% Bank loan <\/span><\/p>\n<\/td>\n \n 2,00,000<\/span><\/p>\n<\/td>\n \n 1,50,000<\/span><\/p>\n<\/td>\n \n Account receivable <\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n \n 1,25,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Sundry creditors <\/span><\/p>\n<\/td>\n \n 80,000<\/span><\/p>\n<\/td>\n \n 60,000<\/span><\/p>\n<\/td>\n \n Cash at bank<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Bills payable<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n 70,000<\/span><\/p>\n<\/td>\n \n Discount on share <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n 15,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 10,05,000<\/span><\/p>\n<\/td>\n \n 10,05,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 10,05,000<\/span><\/p>\n<\/td>\n \n 10,05,000<\/span><\/p>\n<\/td>\n<\/tr>\n <\/p>\n \u00a0<\/td>\n \u00a0<\/td>\n \u00a0<\/td>\n \u00a0<\/td>\n \u00a0<\/td>\n \u00a0<\/td>\n \u00a0<\/td>\n<\/tr>\n <\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Journal Entries <\/span><\/b><\/p>\n For additional information<\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n Date<\/span><\/p>\n<\/td>\n \n Particulars<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n LF<\/span><\/p>\n<\/td>\n \n Amount <\/span><\/p>\n<\/td>\n \n Amount <\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Tax paid <\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Tax account <\/span><\/p>\n<\/td>\n \n Dr <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 To Bank account <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n (Being- tax paid)<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Investment sold <\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/sup><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Bank account<\/span><\/p>\n<\/td>\n \n Dr <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 To Investment account <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 To P&L adjustment (profit) account <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n (Being- investment sold at profit)<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Fixed assets sold <\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Bank account<\/span><\/p>\n<\/td>\n \n Dr <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n P&L adjustment (loss) account <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 To Fixed assets account <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n (Being- fixed assets sold at loss)<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Transferred <\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n P&L adjustment account<\/span><\/p>\n<\/td>\n \n Dr <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 To Depreciation account <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 To Discount on share account <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n (Being- depreciation and discount on share transferred)<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Required: \u00a0 (1) Schedule change in working capital; (2) Funds from operation; (3) Funds fund flow statement\u00a0 <\/span><\/p>\n \u00a0[Answer:\u00a0 Increase in WC = Rs 20,000: FFO = Rs 130,000; FFS = Rs 200,000]<\/span><\/i><\/p>\n *Purchase of fixed assets = Rs 105,000; <\/span><\/i><\/p>\n SOLUTION:\u00a0 <\/span><\/b><\/p>\n Schedule Change in Working Capital<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars<\/span><\/p>\n<\/td>\n \n 2019<\/span><\/p>\n<\/td>\n \n 2020<\/span><\/p>\n<\/td>\n \n Effect in working capital<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Increase<\/span><\/p>\n<\/td>\n \n Decrease<\/span><\/p>\n<\/td>\n<\/tr>\n \n Current assets: <\/span><\/b><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n<\/tr>\n \n Stock <\/span><\/p>\n<\/td>\n \n 1,25,000<\/span><\/p>\n<\/td>\n \n 90,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n 35,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Account receivable <\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n \n 1,25,000<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Cash at bank<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n A <\/span><\/b><\/p>\n<\/td>\n \n 205,000<\/span><\/p>\n<\/td>\n \n 225,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Current liabilities:\u00a0 <\/span><\/b><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n<\/tr>\n \n Sundry creditors <\/span><\/p>\n<\/td>\n \n 80,000<\/span><\/p>\n<\/td>\n \n 60,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Bills payable <\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n 70,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n B<\/span><\/b><\/p>\n<\/td>\n \n 1,30,000<\/span><\/p>\n<\/td>\n \n 1,30,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Net change working capital (A-B)<\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n \n 95,000<\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n \n 55,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Increase in working capital <\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Total <\/span><\/p>\n<\/td>\n \n 95,000<\/span><\/p>\n<\/td>\n \n 95,000<\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Profit and Loss Adjustment Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n \n Particulars<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Particulars<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Net profit (175,000 \u2013 150,000)<\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n By Profit on sale of investment <\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Transfer to general reserve <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n By Operating profit (FFO)<\/span><\/p>\n<\/td>\n \n 130,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Discount on share written off <\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Income tax paid <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Loss on sale of fixed assets<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Depreciation <\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 285,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 285,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Funds Flow Statement<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n \n Inflow or sources<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Outflow or uses<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n<\/tr>\n \n Funds from operation\u00a0 <\/span><\/p>\n<\/td>\n \n 130,000<\/span><\/p>\n<\/td>\n \n Increase in working capital <\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Sale of investment <\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n \n Repaid of bank loan\u00a0 <\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Sale of fixed assets <\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n Income tax paid <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Purchase of fixed assets <\/span><\/p>\n<\/td>\n \n 105,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 200,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 200,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Given and working note: <\/span><\/i><\/p>\n Fixed Assets Account<\/span><\/i><\/p>\n\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Opening balance <\/span><\/i><\/p>\n<\/td>\n \n 625,000<\/span><\/i><\/p>\n<\/td>\n \n By Bank (sold, inflow) <\/span><\/i><\/p>\n<\/td>\n \n 60,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Profit and loss (profit)<\/span><\/i><\/p>\n<\/td>\n \n 10,000<\/span><\/i><\/p>\n<\/td>\n \n By Depreciation\u00a0 <\/span><\/i><\/p>\n<\/td>\n \n 40,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Bank (purchase, outflow, b\/f) <\/span><\/i><\/p>\n<\/td>\n \n 105,000<\/span><\/i><\/p>\n<\/td>\n \n By Closing balance <\/span><\/i><\/p>\n<\/td>\n \n 640,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 740,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 740,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n PROBLEM: 12<\/span><\/b><\/p>\n The following income statement and balance sheet of AB Company Ltd as on 31st<\/sup> December are provided:<\/span><\/p>\n Trading, Profit and Loss Account<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Particulars<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Opening stock<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n By Sales (net)<\/span><\/p>\n<\/td>\n \n 7,50,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Purchase (net)<\/span><\/p>\n<\/td>\n \n 3,00,000<\/span><\/p>\n<\/td>\n \n By Closing stock <\/span><\/p>\n<\/td>\n \n 55,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Wages<\/span><\/p>\n<\/td>\n \n 1,00,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Factory overheads<\/span><\/p>\n<\/td>\n \n 55,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Gross profit c\/d<\/span><\/p>\n<\/td>\n \n 3,00,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 805,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 805,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Administrative expenses<\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n \n By Gross profit b\/d<\/span><\/p>\n<\/td>\n \n 3,00,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Selling expenses <\/span><\/p>\n<\/td>\n \n 55,000<\/span><\/p>\n<\/td>\n \n By Gain on sale of investment\u00a0 <\/span><\/p>\n<\/td>\n \n 15,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Distribution expenses<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Depreciation <\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Provision for taxation <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Goodwill written off<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Net profit c\/d<\/span><\/p>\n<\/td>\n \n 110,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 315,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 315,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Proposed dividend <\/span><\/p>\n<\/td>\n \n 35,000<\/span><\/p>\n<\/td>\n \n By Net profit b\/d <\/span><\/p>\n<\/td>\n \n 110,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Reserve fund <\/span><\/p>\n<\/td>\n \n 45,000<\/span><\/p>\n<\/td>\n \n By Balance b\/d<\/span><\/p>\n<\/td>\n \n 60,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Balance c\/d <\/span><\/p>\n<\/td>\n \n 90,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 170,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 170,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Balance Sheet<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n \n Liabilities<\/span><\/p>\n<\/td>\n \n Year 1<\/span><\/p>\n<\/td>\n \n Year 2<\/span><\/p>\n<\/td>\n \n Assets <\/span><\/p>\n<\/td>\n \n Year 1<\/span><\/p>\n<\/td>\n \n Year 2<\/span><\/p>\n<\/td>\n<\/tr>\n \n Equity share capital <\/span><\/p>\n<\/td>\n \n 3,00,000<\/span><\/p>\n<\/td>\n \n 5,00,000<\/span><\/p>\n<\/td>\n \n Fixed assets <\/span><\/p>\n<\/td>\n \n 320,000<\/span><\/p>\n<\/td>\n \n 505,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Reserve fund <\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n 65,000<\/span><\/p>\n<\/td>\n \n Stock <\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n 55,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Profit and loss account <\/span><\/p>\n<\/td>\n \n 60,000<\/span><\/p>\n<\/td>\n \n 90,000<\/span><\/p>\n<\/td>\n \n Debtors<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Bank overdraft <\/span><\/p>\n<\/td>\n \n 1,50,000<\/span><\/p>\n<\/td>\n \n 70,000<\/span><\/p>\n<\/td>\n \n Cash at bank<\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n \n 125,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Sundry creditors <\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n Goodwill <\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Provision for taxation<\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n Investment <\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 610,000<\/span><\/p>\n<\/td>\n \n 785,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 610,000<\/span><\/p>\n<\/td>\n \n 785,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Required:\u00a0 (1) Schedule of charges of working capital; (2) Funds from operation; (3) Funds flow statement<\/span><\/p>\n \u00a0[Answer:\u00a0 Increase in WC = Rs 135,000: FFO = Rs 160,000; FFS = Rs 420,000]<\/span><\/i><\/p>\n * FA purchase = Rs 215,000; Investment sold = Rs 60,000; Tax paid = Rs 35,000<\/span><\/i><\/p>\n SOLUTION:\u00a0 <\/span><\/b><\/p>\n Schedule Change in Working Capital<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars<\/span><\/p>\n<\/td>\n \n Year 1<\/span><\/p>\n<\/td>\n \n Year 2<\/span><\/p>\n<\/td>\n \n Effect in WC<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Increase<\/span><\/p>\n<\/td>\n \n Decrease<\/span><\/p>\n<\/td>\n<\/tr>\n \n Current assets: <\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Stock <\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n 55,000<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n<\/tr>\n \n Debtors<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Cash at bank<\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n \n 125,000<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n<\/tr>\n \n A <\/span><\/b><\/p>\n<\/td>\n \n 175,000<\/span><\/b><\/p>\n<\/td>\n \n 220,000<\/span><\/b><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n<\/tr>\n \n Current liabilities:\u00a0 <\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Bank overdraft <\/span><\/p>\n<\/td>\n \n 1,50,000<\/span><\/p>\n<\/td>\n \n 70,000<\/span><\/p>\n<\/td>\n \n 80,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n<\/tr>\n \n Sundry creditors <\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n –<\/span><\/p>\n<\/td>\n<\/tr>\n \n B<\/span><\/b><\/p>\n<\/td>\n \n 2,00,000<\/span><\/b><\/p>\n<\/td>\n \n 1,10,000<\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Net change working capital (A \u2212 B)<\/span><\/p>\n<\/td>\n \n (25,000)<\/span><\/p>\n<\/td>\n \n 110,000<\/span><\/p>\n<\/td>\n \n 145,000<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Increase in working capital <\/span><\/p>\n<\/td>\n \n 135,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 135,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Total <\/span><\/b><\/p>\n<\/td>\n \n 60,000<\/span><\/b><\/p>\n<\/td>\n \n 60,000<\/span><\/b><\/p>\n<\/td>\n \n 145,000<\/span><\/b><\/p>\n<\/td>\n \n 145,000<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Profit and Loss Adjustment Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n \n Particulars<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Particulars<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Net profit (90,000 \u2013 60,000)<\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n \n By Profit on sale of investment <\/span><\/p>\n<\/td>\n \n 15,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Depreciation <\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n \n By Operating profit (FFO)<\/span><\/p>\n<\/td>\n \n 160,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Provision for taxation <\/span><\/p>\n<\/td>\n \n 25,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Goodwill written off <\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Proposed dividend<\/span><\/p>\n<\/td>\n \n 35,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Transfer to reserve fund <\/span><\/p>\n<\/td>\n \n 45,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 175,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 175,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Funds Flow Statement<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n \n Sources<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Uses<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n<\/tr>\n \n Funds from operation\u00a0 <\/span><\/p>\n<\/td>\n \n 160,000<\/span><\/p>\n<\/td>\n \n Increase in working capital <\/span><\/p>\n<\/td>\n \n 135,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Issue of shares <\/span><\/p>\n<\/td>\n \n 200,000<\/span><\/p>\n<\/td>\n \n Tax paid <\/span><\/p>\n<\/td>\n \n 35,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Sale of investment <\/span><\/p>\n<\/td>\n \n 60,000<\/span><\/p>\n<\/td>\n \n Dividend paid <\/span><\/p>\n<\/td>\n \n 35,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Purchase of fixed assets <\/span><\/p>\n<\/td>\n \n 215,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 420,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 420,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Given and working note: <\/span><\/i><\/p>\n Fixed Assets Account<\/span><\/i><\/p>\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Opening balance <\/span><\/i><\/p>\n<\/td>\n \n 320,000<\/span><\/i><\/p>\n<\/td>\n \n By Depn (P&L adjustment)<\/span><\/i><\/p>\n<\/td>\n \n 30,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Bank (purchase, outflow, b\/f) <\/span><\/i><\/p>\n<\/td>\n \n 215,000<\/span><\/i><\/p>\n<\/td>\n \n By Closing balance <\/span><\/i><\/p>\n<\/td>\n \n 505,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 535,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 535,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Investment Account<\/span><\/i><\/p>\n\n\n\n\n\n\n \n Particulars\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Opening balance <\/span><\/i><\/p>\n<\/td>\n \n 75,000<\/span><\/i><\/p>\n<\/td>\n \n By Bank (sold, b\/f)<\/span><\/i><\/p>\n<\/td>\n \n 60,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To P&L (profit)<\/span><\/i><\/p>\n<\/td>\n \n 15,000<\/span><\/i><\/p>\n<\/td>\n \n By Closing balance <\/span><\/i><\/p>\n<\/td>\n \n 30,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 90,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 90,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Provision for Taxation Account<\/span><\/i><\/p>\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Tax paid (b\/f) <\/span><\/i><\/p>\n<\/td>\n \n 35,000<\/span><\/i><\/p>\n<\/td>\n \n By Opening balance <\/span><\/i><\/p>\n<\/td>\n \n 30,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Closing balance <\/span><\/i><\/p>\n<\/td>\n \n 20,000<\/span><\/i><\/p>\n<\/td>\n \n By P&L adjustment account\u00a0\u00a0 <\/span><\/i><\/p>\n<\/td>\n \n 25,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 55,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 55,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n \u00a0<\/span><\/b><\/p>\n Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n PROBLEM: 13<\/span><\/b><\/p>\n The following are the balance sheets and income statement of ABC Company Ltd: <\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n Liabilities <\/span><\/p>\n<\/td>\n \n 2020<\/span><\/p>\n<\/td>\n \n 2019<\/span><\/p>\n<\/td>\n \n Assets <\/span><\/p>\n<\/td>\n \n 2020<\/span><\/p>\n<\/td>\n \n 2019<\/span><\/p>\n<\/td>\n<\/tr>\n \n Creditors<\/span><\/p>\n<\/td>\n \n 14,000<\/span><\/p>\n<\/td>\n \n 11,000<\/span><\/p>\n<\/td>\n \n Cash<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n 14,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Bills payable<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n Debtors<\/span><\/p>\n<\/td>\n \n 16,000<\/span><\/p>\n<\/td>\n \n 11,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Debentures<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n Prepaid expenses<\/span><\/p>\n<\/td>\n \n 9,000<\/span><\/p>\n<\/td>\n \n 6,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Accrued interest<\/span><\/p>\n<\/td>\n \n 12,000<\/span><\/p>\n<\/td>\n \n 9,000<\/span><\/p>\n<\/td>\n \n Stock<\/span><\/p>\n<\/td>\n \n 26,000<\/span><\/p>\n<\/td>\n \n 15,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Accumulated depn: <\/span><\/p>\n<\/td>\n \n \u2013<\/span><\/p>\n<\/td>\n \n \u2013<\/span><\/p>\n<\/td>\n \n Investment<\/span><\/p>\n<\/td>\n \n 12,000<\/span><\/p>\n<\/td>\n \n 8,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Building<\/span><\/p>\n<\/td>\n \n 13,000<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n Land<\/span><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n 50,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Plant<\/span><\/p>\n<\/td>\n \n 15,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n Building<\/span><\/p>\n<\/td>\n \n 75,000<\/span><\/p>\n<\/td>\n \n 60,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Equity capital<\/span><\/p>\n<\/td>\n \n 130,000<\/span><\/p>\n<\/td>\n \n 100,000<\/span><\/p>\n<\/td>\n \n Plant<\/span><\/p>\n<\/td>\n \n 77,000<\/span><\/p>\n<\/td>\n \n 70,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Share premium<\/span><\/p>\n<\/td>\n \n 8,000<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n Goodwill<\/span><\/p>\n<\/td>\n \n 19,000<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Retained earning<\/span><\/p>\n<\/td>\n \n 50,500<\/span><\/p>\n<\/td>\n \n 43,000<\/span><\/p>\n<\/td>\n \n Discount on debentures<\/span><\/p>\n<\/td>\n \n 3,500<\/span><\/p>\n<\/td>\n \n 4,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/p>\n<\/td>\n \n 287,500<\/span><\/p>\n<\/td>\n \n 258,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 287,500<\/span><\/p>\n<\/td>\n \n 258,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Income Statement for 2020<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Particulars <\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Sales<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 400,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Less: Cost of goods sold<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 290,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Gross margin<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 110,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Less: Operating expenses<\/span><\/p>\n<\/td>\n \n 65,500<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Depreciation for the year<\/span><\/p>\n<\/td>\n \n 9,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Goodwill written off <\/span><\/p>\n<\/td>\n \n 1,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Loss on sale of plant (free given)<\/span><\/p>\n<\/td>\n \n 2,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Interest expenses<\/span><\/p>\n<\/td>\n \n 4,500<\/span><\/p>\n<\/td>\n \n 82,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0\u00a0 \u00a028,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Add:\u00a0 Other income<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Gain on sale of land<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Less: Income tax on gain on sale of land<\/span><\/p>\n<\/td>\n \n 2,500<\/span><\/p>\n<\/td>\n \n 7,500<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Net income<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 35,500<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Additional information:<\/span><\/p>\n (a) Cash dividend amounting to Rs 20,000 paid to equity shareholders.<\/span><\/p>\n (b) Land was sold for Rs 20,000.<\/span><\/p>\n (c) Business tax paid for the year Rs 8,000.<\/span><\/p>\n (d) Tin shed constructed Rs 15,000 for building.<\/span><\/p>\n (e) Plant costing Rs 5,000 with accumulated depreciation of Rs 3,000 was given free of charge.<\/span><\/p>\n (f) Plant costing Rs 18,000 with accumulated depreciation Rs 8,000 was sold for Rs 10,000.<\/span><\/p>\n (g) Interest expenses include Rs 500 amortization of discount on debentures.<\/span><\/p>\n (h) 300 enquiry shares were issued at Rs 110 per share.<\/span><\/p>\n Required:\u00a0 (1) Schedule of charges of working capital; (2) Funds from operation; (3) Funds flow statement<\/span><\/p>\n [Answer:\u00a0 Increase in WC = Rs 24,000: FFO = Rs 40,500; FFS = Rs 103,500]<\/span><\/i><\/p>\n * Plant purchase = Rs 30,000; Investment purchase = Rs 4,000; <\/span><\/i><\/p>\n Tax paid for FFS (8,000 + 2,500) = Rs 10,500]<\/span><\/i><\/p>\n SOLUTION: <\/span><\/b><\/p>\n Schedule Change in Working Capital<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars <\/span><\/p>\n<\/td>\n \n Year<\/span><\/p>\n<\/td>\n \n Year<\/span><\/p>\n<\/td>\n \n Effect on WC<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 2019<\/span><\/p>\n<\/td>\n \n 2020<\/span><\/p>\n<\/td>\n \n Increase<\/span><\/p>\n<\/td>\n \n Decrease<\/span><\/p>\n<\/td>\n<\/tr>\n \n Current assets:<\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Cash <\/span><\/p>\n<\/td>\n \n 14,000<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n \u2013<\/span><\/p>\n<\/td>\n \n 4,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Debtors <\/span><\/p>\n<\/td>\n \n 11,000<\/span><\/p>\n<\/td>\n \n 16,000<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n \u2013<\/span><\/p>\n<\/td>\n<\/tr>\n \n Prepaid expenses <\/span><\/p>\n<\/td>\n \n 6,000<\/span><\/p>\n<\/td>\n \n 9,000<\/span><\/p>\n<\/td>\n \n 3,000<\/span><\/p>\n<\/td>\n \n \u2013<\/span><\/p>\n<\/td>\n<\/tr>\n \n Stock<\/span><\/p>\n<\/td>\n \n 15,000<\/span><\/p>\n<\/td>\n \n 26,000<\/span><\/p>\n<\/td>\n \n 11,000<\/span><\/p>\n<\/td>\n \n \u2013 <\/span><\/p>\n<\/td>\n<\/tr>\n \n A<\/span><\/b><\/p>\n<\/td>\n \n 46,000<\/span><\/p>\n<\/td>\n \n 61,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Current liabilities:<\/span><\/b><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Creditors <\/span><\/p>\n<\/td>\n \n 11,000<\/span><\/p>\n<\/td>\n \n 14,000<\/span><\/p>\n<\/td>\n \n \u2013<\/span><\/p>\n<\/td>\n \n 3,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Bills payable <\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n 5,000<\/span><\/p>\n<\/td>\n \n 15,000<\/span><\/p>\n<\/td>\n \n \u2013<\/span><\/p>\n<\/td>\n<\/tr>\n \n Accrued interest<\/span><\/p>\n<\/td>\n \n 9,000<\/span><\/p>\n<\/td>\n \n 12,000<\/span><\/p>\n<\/td>\n \n \u2013<\/span><\/p>\n<\/td>\n \n 3,000 <\/span><\/p>\n<\/td>\n<\/tr>\n \n B<\/span><\/b><\/p>\n<\/td>\n \n 40,000<\/span><\/p>\n<\/td>\n \n 31,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n Working capital (A \u2013 B) <\/span><\/p>\n<\/td>\n \n 6,000<\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n \n 34,000<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Increase in working capital <\/span><\/p>\n<\/td>\n \n 24,000<\/span><\/p>\n<\/td>\n \n \u2013 <\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 24,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n \n 34,000<\/span><\/p>\n<\/td>\n \n 34,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/b><\/p>\n \u00a0<\/span><\/b><\/p>\n P & L Adjustment Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n \n Particulars <\/span><\/p>\n<\/td>\n \n Amount <\/span><\/p>\n<\/td>\n \n Particulars <\/span><\/p>\n<\/td>\n \n Amount <\/span><\/p>\n<\/td>\n<\/tr>\n \n To Net profit (50,500 \u2013 43,000)<\/span><\/p>\n<\/td>\n \n 7,500<\/span><\/p>\n<\/td>\n \n By Gain on land<\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Depreciation on building <\/span><\/p>\n<\/td>\n \n 3,000<\/span><\/p>\n<\/td>\n \n By Operating Profit (FFO)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/p>\n<\/td>\n \n 40,500<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Depreciation on plant <\/span><\/p>\n<\/td>\n \n 6,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Loss on sales of plant<\/span><\/p>\n<\/td>\n \n 2,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Goodwill written off <\/span><\/p>\n<\/td>\n \n 1,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Discount on debenture amortized <\/span><\/p>\n<\/td>\n \n 500<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Dividend paid <\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n To Income tax paid (8,000 + 2,500)<\/span><\/p>\n<\/td>\n \n 10,500<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 50,500<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 50,500<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/p>\n Fund Flow Statement (FFS)<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n \n Inflow\/Sources <\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n \n Outflow\/Used<\/span><\/p>\n<\/td>\n \n Amount<\/span><\/p>\n<\/td>\n<\/tr>\n \n Operating profit (FFO)<\/span><\/p>\n<\/td>\n \n 40,500<\/span><\/p>\n<\/td>\n \n Increase in working capital <\/span><\/p>\n<\/td>\n \n 24,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Issue of equity shares <\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n \n Purchase of plant <\/span><\/p>\n<\/td>\n \n 30,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Increase in share premium <\/span><\/p>\n<\/td>\n \n 3,000<\/span><\/p>\n<\/td>\n \n Purchase of building (tin shed)<\/span><\/p>\n<\/td>\n \n 15,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Sales of plant <\/span><\/p>\n<\/td>\n \n 10,000<\/span><\/p>\n<\/td>\n \n Purchase of investment<\/span><\/p>\n<\/td>\n \n 4,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n Sales of land<\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n \n Cash dividend paid <\/span><\/p>\n<\/td>\n \n 20,000<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n Tax paid (8,000 + 2,500)<\/span><\/p>\n<\/td>\n \n 10,500<\/span><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 103,500<\/span><\/p>\n<\/td>\n \n \u00a0<\/span><\/p>\n<\/td>\n \n 103,500<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n \u00a0<\/span><\/p>\n Accumulated Depreciation Account<\/span><\/i><\/p>\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Depn on sales [3,000\u00a0 + 8,000 ]<\/span><\/i><\/p>\n<\/td>\n \n 11,000*<\/span><\/i><\/p>\n<\/td>\n \n By Beginning balance <\/span><\/i><\/p>\n<\/td>\n \n 20,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Ending balance <\/span><\/i><\/p>\n<\/td>\n \n 15,000<\/span><\/i><\/p>\n<\/td>\n \n By P&L\u00a0 adjustment account\u00a0 <\/span><\/i><\/p>\n<\/td>\n \n 6,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 26,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 26,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Plant Account<\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Beginning balance <\/span><\/i><\/p>\n<\/td>\n \n 70,000<\/span><\/i><\/p>\n<\/td>\n \n By Bank\/sales account <\/span><\/i><\/p>\n<\/td>\n \n 10,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Bank\/Purchase account <\/span><\/i><\/p>\n<\/td>\n \n 30,000<\/span><\/i><\/p>\n<\/td>\n \n By Depreciation\u00a0 on sales<\/span><\/i><\/p>\n<\/td>\n \n 11,000*<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n By P&L\u00a0 account (free given)<\/span><\/i><\/p>\n<\/td>\n \n 2,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n By Ending balance <\/span><\/i><\/p>\n<\/td>\n \n 77,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 100,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 100,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n .<\/span><\/i><\/p>\n\n\n\n\n\n \n Accumulated depreciation<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/i><\/p>\n<\/td>\n \n Original cost \u2013 Book salvage value<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n 3,000<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/i><\/p>\n<\/td>\n \n 5,000 \u2013 Book salvage value<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n Book salvage value<\/span><\/i><\/p>\n<\/td>\n \n =<\/span><\/i><\/p>\n<\/td>\n \n 2,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Again, <\/span><\/i><\/p>\n Loss = Book salvage value \u2013 Cash salvage value = 2,000 \u2013 Nil = 2,000<\/span><\/i><\/i><\/p>\n \u00a0<\/span><\/i><\/p>\n Land Account<\/span><\/i><\/p>\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To Beginning balance <\/span><\/i><\/p>\n<\/td>\n \n 50,000<\/span><\/i><\/p>\n<\/td>\n \n By Bank (sold) account <\/span><\/i><\/p>\n<\/td>\n \n 20,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To P&L\u00a0 Account\u00a0 [profit]<\/span><\/i><\/p>\n<\/td>\n \n 10,000<\/span><\/i><\/p>\n<\/td>\n \n By Ending balance <\/span><\/i><\/p>\n<\/td>\n \n 40,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 60,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 60,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n Building Account<\/span><\/i><\/p>\n\n\n\n\n\n\n\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n \n Particulars <\/span><\/i><\/p>\n<\/td>\n \n Amount<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0To Beginning balance <\/span><\/i><\/p>\n<\/td>\n \n 60,000<\/span><\/i><\/p>\n<\/td>\n \n By Bank (sold) account<\/span><\/i><\/p>\n<\/td>\n \n Nil<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n To\u00a0 Bank (tin shed)<\/span><\/i><\/p>\n<\/td>\n \n 15,000<\/span><\/i><\/p>\n<\/td>\n \n By Depreciation on sales <\/span><\/i><\/p>\n<\/td>\n \n Nil<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n By Ending balance <\/span><\/i><\/p>\n<\/td>\n \n 75,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 75,000<\/span><\/i><\/p>\n<\/td>\n \n \u00a0<\/span><\/i><\/p>\n<\/td>\n \n 75,000<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/i><\/p>\n ***** #EP<\/span>Online<\/span>Study *****<\/span><\/p>\n Thank you for investing your time.<\/span><\/i><\/p>\n Please comment on article.<\/span><\/i><\/p>\n You can help us by sharing this post at your social media platform.<\/span><\/i><\/p>\n \u00a0<\/span><\/p>\n Jay G<\/span>o<\/span>o<\/span>g<\/span>l<\/span>e<\/span>, Jay YouTube<\/span>, Jay Social Media<\/span><\/span><\/p>\n \u091c\u092f<\/span> \u0917\u0942<\/span>\u0917<\/span>\u0932<\/span>.<\/span> \u091c\u092f<\/span> \u092f\u0941\u091f\u094d\u092f\u0941\u092c<\/span>,<\/span> \u091c\u092f<\/span> \u0938\u094b\u0936\u0932<\/span> \u092e\u0940\u0921\u093f\u092f\u093e <\/span><\/p>\n \u00a0<\/span><\/i><\/p>\n  <\/p>\n","protected":false},"excerpt":{"rendered":" \u00a0 \u00a0\u00a0 Problems and Solutions of Fund Flow Statement with Adjustments Problems and solutions of fund flow statement with adjustments include Schedule of charges of working capital, funds from operation and funds flow statement. \u00a0 Here, best questions are solved from easy to difficult methods. After studying and solving these problems, you can solve any […]<\/p>\n","protected":false},"author":19997,"featured_media":4100,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1852,11,117],"tags":[1885,1888,1863,1886,1887],"writers":[144],"yoast_head":"\n