From the following information prepare the balance sheet of Jam Ltd. Inventories Rs. 7,00,000; Equity Share Capital Rs. 16,00,000; Plant and Machinery Rs. 8,00,000; 8% Preference Share Capital Rs. 6,00,000; General Reserves Rs. 6,00,000; Bills payable Rs. 1,50,000; Provision for taxation Rs. 2,50,000; Land and Building Rs. 16,00,000; Non-current Investments Rs. 10,00,000; Cash at Bank Rs. 5,00,000; Creditors Rs. 2,00,000; 12% Debentures Rs. 12,00,000.
Balance Sheet of Jam Ltd.
| Particulars | Note No. | Amount (Rs.) |
|---|---|---|
| I. Equity and Liabilities | ||
| 1. Shareholders’ Funds | ||
| a) Share Capital | 1 | 22,00,000 |
| b) Reserves and Surplus | 6,00,000 | |
| 2. Non-current Liabilities | ||
| a) Long-term borrowings | 12,00,000 | |
| 3. Current Liabilities | ||
| a) Trade Payables | 2 | 3,50,000 |
| b) Short-term Provisions | 2,50,000 | |
| Total | 46,00,000 | |
| II. Assets | ||
| 1. Non-current Assets | ||
| a) Fixed Assets | 3 | 24,00,000 |
| b) Non-current Investments | 10,00,000 | |
| 2. Current Assets | ||
| a) Inventories | 7,00,000 | |
| b) Cash and Cash Equivalents | 4 | 5,00,000 |
| Total | 46,00,000 |
Notes to Accounts
| Particulars | Amount (Rs.) |
|---|---|
| 1. Share Capital | |
| Equity Share Capital | 16,00,000 |
| 8% Preference Share Capital | 6,00,000 |
| Total | 22,00,000 |
| 2. Trade Payables | |
| Creditors | 2,00,000 |
| Bills Payable | 1,50,000 |
| Total | 3,50,000 |
| 3. Fixed Assets | |
| Land and Building | 16,00,000 |
| Plant and Machinery | 8,00,000 |
| Total | 24,00,000 |
| 4. Cash and Cash Equivalents | |
| Cash at Bank | 5,00,000 |
Explanation
The Balance Sheet is prepared in the vertical format as per Schedule III of the Companies Act, 2013, consistent with the examples provided in the textbook context. Liabilities are classified into Shareholders' Funds (Share Capital and Reserves), Non-current Liabilities (Long-term borrowings), and Current Liabilities (Trade Payables and Short-term Provisions). Assets are classified into Non-current Assets (Fixed Assets and Non-current Investments) and Current Assets (Inventories and Cash). The total of Assets (Rs. 46,00,000) matches the total of Equity and Liabilities, ensuring the accounting equation is balanced.
Solution Steps
Step 1: Identify Shareholders' Funds: Share Capital (Equity Rs. 16,00,000 + Preference Rs. 6,00,000) = Rs. 22,00,000; Reserves and Surplus (General Reserves) = Rs. 6,00,000.
Step 2: Identify Non-current Liabilities: Long-term borrowings (12% Debentures) = Rs. 12,00,000.
Step 3: Identify Current Liabilities: Trade Payables (Creditors Rs. 2,00,000 + Bills Payable Rs. 1,50,000) = Rs. 3,50,000; Short-term Provisions (Provision for taxation) = Rs. 2,50,000.
Step 4: Calculate Total Equity and Liabilities: 22,00,000 + 6,00,000 + 12,00,000 + 3,50,000 + 2,50,000 = Rs. 46,00,000.
Step 5: Identify Non-current Assets: Fixed Assets (Land and Building Rs. 16,00,000 + Plant and Machinery Rs. 8,00,000) = Rs. 24,00,000; Non-current Investments = Rs. 10,00,000.
Step 6: Identify Current Assets: Inventories = Rs. 7,00,000; Cash and Cash Equivalents (Cash at Bank) = Rs. 5,00,000.
Step 7: Calculate Total Assets: 24,00,000 + 10,00,000 + 7,00,000 + 5,00,000 = Rs. 46,00,000.