Accountancy 6 Marks Question

Note No. 1: Calculation of Net Profit before Tax:

Note: No information is given in the question about the amount of net profit or net loss incurred during the year. As such, increase in proprietor's capital will be treated as net profit:

	₹
Opening Capital	2,40,000
Less: Closing Capital	(3,00,000)
Net Profit	60,000

Notes:

1.	Calculation of Net Profit before Tax:	₹
	Profit & Loss Balance on 31st March, 2018	67,000
	Less: Profit & Loss Balance on 31st March, 2017	(20,000)
		47,000
	Add: Transfer to General Reserve	25,000
	Provision for Tax made during the Current year	30,000
	Net Profit before Tax	1,02,000
2.	Decrease in the amount of Land & Building is treated as sale.

Note:

Calculation of Net Profit before Tax:	₹
Reserve & Surplus Balance on 31st March, 2018	21,120
Less: Reserve & Surplus Balance on 31st March, 2017	(20,080)
	1,040
Add: Dividend Paid	7,000
	8,040

Note:

Retained Earnings on 31st March, 2018	60,000
Less: Retained Earnings on 31st March, 2017	(50,000)
Net profit before tax	10,000

Working note:

1.  

2.  

Working Note:

Note:

Calculation of Net Profit before Tax:	₹
Profit & Loss Balance on 31st March, 2014	79,500
Less: Profit & Loss Balance on 31st March, 2013	(42,000)
	37,500
Add: Transfer to General Reserve	2,000
Dividend Paid	17,500
	57,000

Working notes:

1. Calculation of Net Loss before Tax

Profit & Loss Balance: ₹ 3,50,000 - ₹ 4,00,000 = (₹ 50,000)

2.  

Note:

Net Profit for the year	40,000
Add: Transfer to General Reserve	15,000
Net Profit before Tax	55,000

Notes:

1. Calculation of Net Profit before Tax:

	₹
Profit & Loss Balance on 31 st March, 2018	2,90,000
Less: Profit & Loss Balance on 31st March, 20 I 7	(1,80,000)
	1,10,000
Add: Transfer to General Reserve	50,000
Proposed Dividend for Previous year	60,000
	2,20,000

2.  

Working Notes:

1.  

2.  

3. Sale Price of Machinery:

Cost of Machinery-Accumulated Depreciation - Loss on Sale
₹ 1,50,000 - ₹ 32,000 - ₹ 44,000 = ₹ 74,000

4. Interest on Debentures:

	₹
8% on ₹ 5,00,000 for six months	20,000
8% on ₹ 3,50,000 for six months	14,000
	34,000

Note:

Calculation of Net Profit before Tax:	₹
Reserve & Surplus Balance on 31st March, 2018	70,000
Less: Reserve & Surplus Balance on 31st March, 2017	50,000
	20,000

Note:

	₹
Profit & Loss Balance on 31.3.2018	1,83,000
Less: Profit & Loss Balance on 31.3.2017	(82,000)
Net Profit before Tax	1,01,000

Note:

Calculation of Net Profit before Tax:	₹
Profit & Loss Balance on 31st March, 2018	6,200
Less: Profit & Loss Balance on 31st March, 2017	(7,200)
	1,000
Add: Transfer to General Reserve (₹ 12,000 - ₹ 8,000)	4,000
Proposed Dividend for Previous year	11,200
Net Profit before Tax	14,200

Note: Figure in brackets represent minus items.

Calculation of Cash Flow from Operating Activities for the year ended 31st March, 2015: Working Note:

Calculation of Net Profit before Tax	₹	₹
Surplus (i.e., Balance in the Statement of Profit and Loss as on 31st March, 2015)		71,000
Surplus (i.e., Balance in the Statement of Profit and Loss as on 31st March, 2014)		89,000
Net Loss during the year		18,000
Add: Tax Paid	23,000
Interim Dividend Paid	36,000	59,000
Net Profit before Tax		41,000

Notes:

1. Calculation of Net Profit before Tax:

	₹
Profit & Loss Balance on 31st March, 2018	1,60,000
Less: Profit & Loss Balance on 31st March, 2017	(85,000)
	75,000
Add: Preference Dividend for Previous Year (8% on ₹ 30,000)*	2,400
Interim Dividend on Equity Capital	20,000
	97,400
Less: Decrease in General Reserve (₹ 25,000 - ₹ 35,000)	(10,000)
Net Profit before Tax	87,400

* Dividend on Preference Shares is paid before payment of dividend on equity shares. The Company has paid interim dividend on equity shares. Hence, it must have paid previous year's dividend ₹ 2,400 on pref. shares.

2.  

3. It is assumed that debentures have been redeemed at the end of the year i.e., on 31st March, 2018.

Notes:

1.  

Calculation of Net Profit before Tax:	₹
Reserve & Surplus Balance on 31st March, 2018	1,25,000
Less: Reserve & Surplus Balance on 3 l st March, 2017	(20,000)
	1,05,000
Add: Proposed Dividend for Previous year	20,000
Provision for Tax made during the Current year	15,000
Net Profit before Tax	1,40,000

2.  

3.  

1.  

Notes:

1. Calculation of Net Profit before Tax:

	₹
Profit & Loss Balance on 31st March, 2018	1,00,000
Less: Profit & Loss Balance on 31st March, 2017	(1,00,000)
	2,00,000
Add: Transfer to Capital Redemption Reserve	1,00,000
Transfer to General Reserve	35,000
Proposed Dividend on Equity Shares (8% on ₹ 4,50,000)	36,000
Dividend on Preference Shares (5% on ₹ 3,00,000)	15,000
Net Profit before Tax	3,86,000

2. Negative balance of Profit & Loss amounting to ₹ 1,00,000 appearing in the Balance Sheet on 31.3.2017 represents an amount of loss. In the current year (2017-18), after covering this loss of ₹ 1,00,000, the Profit and Loss shows a profit of ₹ 1,00,000. It means net profit during the current year must have been ₹ 1,00,000 + ₹ 1,00,000 = ₹ 2,00,000.
3. Interest on Debentures :

	₹
8% on ₹ 2,00,000 for 6 months	8,000
8% on ₹ 3,00,000 for 6 months	12,000
	20,000

2.  

Note:

Calculation of Net Profit before Tax:	₹
Reserve & Surplus Balance on 31st March, 2018	60,000
Less: Reserve & Surplus Balance on 31st March, 2017	(50,000)
	10,000
Add: Dividend paid for Current year	30,000
	40,000

Notes:

1. Calculation of Net Profit before Tax:

	₹
Reserve & Surplus Balance on 31st March, 2018	4,00,000
Less: Reserve & Surplus Balance on 31st March, 2017	2,00,000
	2,00,000
Add: Proposed Dividend for Previous year	1,00,000
Net Profit before Tax	3,00,000

2.  

Working Notes:

1. Net Profit before Tax:

	₹
Profit & Loss Balance on 31st March, 2013	3,08,000
Less: Profit & Loss Balance on 31st March, 2012	(1,82,000)
	1,26,000

2.  

Notes:

1.	Reserve and Surplus on 31st March, 2018		23,000
	Reserve and Surplus on 31st March, 2017		10,000
			13,000
2.	Cash & Cash Equivalents:
	Cash & Cash Equivalents	47,000	30,000
	Current Investments	8,000	10,000
		55,000	40,000

Notes:

1. Calculation ofNet Profit before Tax:

	₹
Profit & Loss Balance on 31st March, 2018	25,000
Less: Profit & Loss Balance on 31st March, 2017	(1,25,000)
	1,00,000
Add: Transfer to General Reserve	70,000
Preference Dividend for previous year (8% on ₹ 50,000)	4,000
Interim Dividend on Equity Capital	24,000
	2,000

* Dividend on Pref. Shares is paid before payment of dividend on equity shares. The Company has paid interim dividend on equity shares. Hence, it must have paid previous year's dividend on preference shares.

2. It has been assumbed that debentures were redeemed at the end of the year.

3.  

Notes:

1. Calculation of Net Profit before Tax:

	₹
Profit & Loss Balance on 31st March, 2018	60,000
Less: Profit & Loss Balance on 31st March, 2017	(8,000)
	68,000
Add: Transfer to General Reserve	24,000
Interim Dividend Paid	20,000
	1,12,000

Negative balance of Profit & Loss amounting to ₹ 8,000 appearing in the balance sheet on 31.3.2017 represents an amount of loss. In the current year, after covering this loss of ₹ 8,000, the Profit & Loss shows a profit of ₹ 60,000. It means that net profit during the current year must have been ₹ 60,000 + ₹ 8,000 = ₹ 68,000.

2.  

3.  

4.  

Notes:

1. Calculation of net profit before tax:

	₹
Profit & Loss Balance (Net Loss) on 31.3.2018	(1,70,000)
Profit & Loss Balance (Net Loss) on 31.3.2017	(2,15,000)
Net Profit before Tax	45,000

2. Interest paid on Public Deposits:

		₹
12% on ₹ 2,50,000 for 1 year	=	30,000
12% on ₹ 50,000 for 3 months	=	1,500
		31,500

3.  

Notes:

1. Calculation of Net Profit before Tax.

	₹
Reserve & Surplus Balance on 31st March, 2018	1,70,000
Less: Reserve & Surplus Balance on 31st March, 2017	91,000
	79,000
Add: Interim Dividend Paid	60,000
Provision for Tax made during the Current year	34,000
	1,73,000

2.  

Notes:

1.  

Profit and Loss Balance on 31st March, 2018	45,000
Less: Profit & Loss Balance on 31st March, 201 7	(50,000)
Net Loss during the year	5,000

2.  

3.  

Notes:

1. Calculation of Net Profit before Tax:

	₹
Reserve & Surplus Balance on 31st March, 2017	72,000
less: Reserve & Surplus Balance on 31st March, 2016	(50,000)
	22,000
Provision for Tax made during the Current year	24,000
Net Profit before Tax	46,000

2.  

3.  

* Balancing figure of Accumulated Depreciation Ne ~ 12,000 will be transferred to the Cr. side of Plant & Machinery Account.

Notes:

1. Calculation of Net Profit before Tax:

	₹
Reserve & Surplus Balance on 31st March, 2018	1,78,000
Less: Reserve & Surplus Balance on 31st March, 2017	75,000
	1,03,000
Add: Proposed Dividend for Previous year	12,000
Provision for Tax made during Current year	50,000
Net Profit before Tax	1,65,000

2. Increase in Goodwill will be treated as purchase of Goodwill.

3.  

4.  

5.  

Notes:

1. Calculation of Net Profit before Tax:

	₹
Profit & Loss Balance on 31st March, 2018	1,20,000
Less: Profit & Loss Balance on 31st March, 2017	(1,59,000)
	39,000
Add: Transfer to General Reserve	1,20,000
Net Profit before Tax	81,000

2. Interest on Debentures:

	₹
8% on 1,00,000 for 1 year	8,000
8% on 50,000 for 6 months	2,000
	10,000

3. It has been assumed that Non-Current investments have been purchased at the end of the accounting year i.e., on 31st March, 2018.

4.  

5.  

Working Notes:

1. Net Profit before tax :

	₹
Reserve & Surplus Balance (₹ 52,000 - ₹ 50,000)	2,000
Add: Provision for Tax for 2018	30,000
Proposed Dividend for 2017	25,000
	57,000

2.  

Working Netes:

1.  

	₹
Statement of Profit & Loss (₹ 2,00,000 - ₹ 1,00,000)	1,00,000
Add: Proposed dividend for Previous Year (20% of ₹ 4,00,000)	80,000
Provision for Tax	80,000
Net Profit before Tax	2,60,000

2.  

3.  

Notes:

1. Calculation of Net Profit before Tax:

	₹
Profit & Loss Balance on 31st March, 2018	75,000
less: Profit & Loss Balance on 31st March, 2017	(30,000)
	1,05,000
Add: Transfer to General Reserve	30,000
Dividend Paid (10% on ₹ 5,00,000)	50,000
Provision for Tax made during the Current year	15,000
Net Profit before Tax	2,00,000

Negative balance of Profit and Loss amounting to ₹ 30,000 appearing in the balance sheet on 31.3.2017 represents an amount of loss. In the current year, after covering this loss of ₹ 30,000, the Profit & Loss shows a profit of ₹ 75,000. It means that net profit during the current year must have been ₹ 75,000 + ₹ 30,000 = ₹1,05,000.

2.  

3.  

Working Notes:

1. Net Profit before Tax:

	₹
Surplus (Balance in Statement of Profit & Loss) on 31st March, 2014	6,00,000
less: Surplus (Balance in Statement of Profit & Loss) on 31st March, 2013	(4,00,000)
	2,00,000
Add : Provision for Tax for Current Year	1,00,000
	3,00,000

2.  

3.  

4. Cash and Cash Equivalents:

	31.3.2014	31.3.2013
	₹	₹
Cash and Bank	6,40,000	7,50,000
Current Investments	4,80,000	3,00,000
	11,20,000	10,50,00

Note:

1. Calculation of Net Profit before Tax:

	₹
Profit & Loss Balance on 31st March, 2018	50,000
Less: Profit & Loss Balance on 31st March, 2017	(37,000)
	87,000
Add: Transfer to General Reserve	22,000
Provision for Tax made during the Current year	20,000
Net Profit before Tax	1,29,000

Negative balance of Profit & Loss amounting to ₹ 37,000 is given in previous year's balance sheet. As such, it represents the amount of loss of the previous year. In the current year, there is a profit in Profit & Loss (after meeting the loss of previous year) amounting to ₹ 50,000. It means that net profit during the current year must have been ₹ 37,000 + ₹ 50,000 = ₹ 87,000.

2.  

3.  

4.  

Notes:

1. Calculation of Net Profit before Tax:

	₹
Reserve and Surplus Balance on 31st March, 2018	1,52,000
Less: Reserve and Surplus Balance on 31st March, 2017	(50,000)
	1,02,000
Add: Provision for Tax made during the Current year	33,000
	1,35,000

2.  

3.  

4.  

Working Notes:

1. Calculation of Net profit before Tax:

	₹
Surplus, i.e., Balance in Statement of Profit and Loss (₹ 5,00,000- ₹ 3,00,000)	2,00,000
Add: Provision for Tax	70,000
Net Profit before Tax	2,70,000

2.  

3.  

Working Notes:

1.  

2.  

Notes:

1. Calculation of Net Profit before Tax:

	₹
Reserve & Surplus Balance on 31st March, 2018	1,97,000
Less: Reserve & Surplus Balance on 31st March, 2017	(1,75,000)
	22,000
Add: Interim Dividend Paid	25,000
Provision for Tax made during the Current year	62,000
Net Profit before Tax	1,09,000

2.  

3.  

		₹
Book Value of Investments sold= 40% of ₹ 50,000	=	20,000
Loss on Sale = 20% of ₹ 20,000	=	(4,000)
Sale Price of Investments		16,000

Working Notes:

1. Net Profit before Tax:

	₹
Loss for the year (₹ 33,000 - ₹ 41,000)	(8,000)
Add: Provision for Tax for 2018 (Note 3)	12,000
Transfer to General Reserve	3,000
Profit before Tax	7,000

2.  

3.  

Working Note:

1. Net Profit before Tax:

	₹
Profit for the year:
Reserve and Surplus on 31st March, 2018	1,07,000
(-) Reserve and Surplus on 31st March, 2017	(25,000)
	82,000
Add: Provision for Taxation for 2018	40,000
Interim Dividend paid ( 15% on ₹ 2,00,000)	30,000
	1,52,000

2. Profit on sale of machinery:

	₹
Cost of Machine sold	50,000
Less: Accumulated Depreciation thereon	(27,000)
Written down value of Machine sold	23,000
Sale amount of Machine	35,000
Profit on sale of Machine	12,000

3.  

Working Notes:

1. Calculation of Net Profit before Tax:

	₹
Profit & Loss Balance on 31st March, 2014	50,000
Less: Profit & Loss Balance on 31st March, 2013	(70,000)
	20,000
Add: Increase in General Reserve	50,000
Interim Dividend paid (12% on ₹ 6,00,000)	72,000
Provision for Tax made during current year (Note 4)	57,000
Net Profit before Tax	1,59,000

2.  

3.  

4.  

5.  

Notes:

1. Calculation of Net Profit before Tax:

	₹
Reserve & Surplus Balance on 31st March, 2018	25,000
Less: Reserve & Surplus Balance on 31st March, 2017	(30,000)
	5,000
Add: Provision for Tax made during the Current year	30,000
	25,000

2.  

3.  

Working Notes:

1.  

2.  

Notes:

1.  

2.  

3.