R Ltd. was incorporated with an authorised capital of ₹4,00,00,000 consisting of 20,00,000 equity shares of ₹10 each and 2,00,000, 8% preference shares of ₹100 each. Other details were as follows: Issued, Subscribed and

CS Executive · Company Accounts & Auditing Practices · PYQS · June 2021
R Ltd. was incorporated with an authorised capital of ₹4,00,00,000 consisting of 20,00,000 equity shares of ₹10 each and 2,00,000, 8% preference shares of ₹100 each. Other details were as follows: Issued, Subscribed and paid-up Capital: 10,00,000 Equity Shares of ₹10 each ₹1,00,00,000; 1,00,000, 8% Preference Shares of ₹100 each ₹1,00,00,000. Total ₹2,00,00,000. The Statement of Profit and Loss of the Company for the year ended 31st March, 2020 showed net profit before tax ₹60,00,000. The net profit brought forward from previous year's Balance Sheet amounted to ₹12,00,000. The Company makes a provision of 30% for income tax. The dividend distribution tax rate (including surcharge and cess) is 17.304%. The following appropriation was proposed by the company: (a) to pay dividend on preference shares; (b) to pay final dividend @ 20% to equity shareholders; (c) transferred to general reserve ₹4,20,000. You are required to show the relevant items in the Balance Sheet. (Showing details in the 'Notes to Accounts').

Answer & Explanation:

Balance Sheet of R Ltd. as at 31st March, 2020 Particulars Note No. Amount (₹) EQUITY AND LIABILITIES (1) Shareholders' Funds: (a) Share Capital (1) 2,00,00,000 (b) Reserve and Surplus (2) 21,15,488 (2) Current Liabilities: (a) Short-term Provisions (3) 50,84,512 Total 2,72,00,000 Notes to Accounts: (1) Share Capital Amount (₹) Authorised Capital: 20,00,000 Equity Shares of ₹10 Each 2,00,00,000 2,00,000 8% Preference Shares of ₹100 Each 2,00,00,000 Issued, subscribed and paid up capital 4,00,00,000 10,00,000 Equity Shares of ₹10 Each Fully Paid 1,00,00,000 1,00,000 8% Preference Shares of ₹100 Each Fully Paid 1,00,00,000 Total 2,00,00,000 (2) Reserve and Surplus Amount (₹) Amount (₹) (a) Profit carried brought forward from previous year 12,00,000 (b) Net Profit before Tax 60,00,000 Less: Income-tax @ 30% (18,00,000) Profit after tax 42,00,000 Less: Appropriations: (i) Preference Dividend paid @ 8% (8,00,000) (ii) Equity Dividend (₹2 x 10,00,000) (20,00,000) (iii) Dividend Distribution Tax (17.304% of ₹28,00,000) (4,84,512) (iv) Transfer to General Reserve (4,20,000) 4,95,488 (c) General Reserve 4,20,000 Total 21,15,488 (3) Short-term provisions Amount (₹) (i) Proposed Dividend (a) Preference Dividend 8,00,000 (b) Equity Dividend 20,00,000 (ii) Dividend Distribution Tax (17.304% of ₹28,00,000) 4,84,512 (iii) Provision for taxation (30% of ₹60,00,000) 18,00,000 Total 50,84,512

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