Question 16 of 19intermediate🔧 ApplyNumerical6 marks

From the following information prepare the balance sheet of Gitanjali Ltd. Inventories Rs. 14,00,000; Equity Share Capital Rs. 20,00,000; Plant and Machinery Rs. 10,00,000; Preference Share Capital Rs. 12,00,000; Debenture Redemption Reserve Rs. 6,00,000; Outstanding Expenses Rs. 3,00,000; Proposed Dividend Rs. 5,00,000; Land and Building Rs. 20,00,000; Current Investments Rs. 8,00,000; Cash Equivalent Rs. 10,00,000; Short term loan from Zaveri Ltd. (A Subsidiary Company of Twilight Ltd.) Rs. 4,00,000; Public Deposits Rs. 12,00,000.

Correct Answer

BALANCE SHEET OF GITANJALI LTD.

ParticularsNote No.Amount (Rs.)
I. Equity and Liabilities
1. Shareholders' Funds
a) Share Capital132,00,000
b) Reserves and Surplus26,00,000
2. Non-current Liabilities
a) Long-term borrowings312,00,000
3. Current Liabilities
a) Short-term borrowings44,00,000
b) Other current liabilities53,00,000
c) Short-term provisions65,00,000
Total62,00,000
II. Assets
1. Non-current Assets
a) Fixed Assets
i) Tangible Assets730,00,000
2. Current Assets
a) Current Investments8,00,000
b) Inventories14,00,000
c) Cash and Cash Equivalents10,00,000
Total62,00,000

NOTES TO ACCOUNTS

Note 1: Share Capital

ParticularsAmount (Rs.)
Equity Share Capital20,00,000
Preference Share Capital12,00,000
Total32,00,000

Note 2: Reserves and Surplus

ParticularsAmount (Rs.)
Debenture Redemption Reserve6,00,000

Note 3: Long-term Borrowings

ParticularsAmount (Rs.)
Public Deposits12,00,000

Note 4: Short-term Borrowings

ParticularsAmount (Rs.)
Short term loan from Zaveri Ltd.4,00,000

Note 5: Other Current Liabilities

ParticularsAmount (Rs.)
Outstanding Expenses3,00,000

Note 6: Short-term Provisions

ParticularsAmount (Rs.)
Proposed Dividend5,00,000

Note 7: Tangible Assets

ParticularsAmount (Rs.)
Land and Building20,00,000
Plant and Machinery10,00,000
Total30,00,000
Exercise: Numerical Questions | Q: 3 | (Page 26)
For More Understanding

Explanation

This question tests the student's ability to classify balance sheet items correctly under the prescribed heads as per Schedule III of Companies Act. Key classifications: Share Capital (Equity + Preference) under Shareholders' Funds; Debenture Redemption Reserve under Reserves and Surplus; Public Deposits under Long-term borrowings; Short-term loan from subsidiary under Short-term borrowings; Outstanding Expenses under Other current liabilities; Proposed Dividend under Short-term provisions; Land & Building and Plant & Machinery under Tangible Assets; Current Investments and Inventories under Current Assets; Cash Equivalent under Cash and Cash Equivalents. The balance sheet must tally at Rs. 62,00,000 on both sides.

Solution Steps

  1. Step 1: Classify all items into Assets and Liabilities

  2. Step 2: Arrange Liabilities under Shareholders' Funds (Share Capital Rs. 32,00,000; Reserves Rs. 6,00,000), Non-current Liabilities (Public Deposits Rs. 12,00,000), and Current Liabilities (Short-term borrowings Rs. 4,00,000; Other current liabilities Rs. 3,00,000; Short-term provisions Rs. 5,00,000)

  3. Step 3: Arrange Assets under Non-current Assets - Tangible Assets (Land & Building Rs. 20,00,000 + Plant & Machinery Rs. 10,00,000 = Rs. 30,00,000) and Current Assets (Current Investments Rs. 8,00,000 + Inventories Rs. 14,00,000 + Cash Equivalent Rs. 10,00,000 = Rs. 32,00,000)

  4. Step 4: Verify Total = Rs. 62,00,000 on both sides

  5. Step 5: Prepare Notes to Accounts for items requiring detailed breakdown

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