Sample Question

Question – Prepare Financial Statement for the following –

BS	Financial Transaction - Year 1
Opening	Started business with cash on 1st April 2010	250,000
Opening	Availed 9% loan on 1st October 2010 (6 months Interest)	75,000
Opening	Interest payable on 31st March
Closing	Purchased shares of Z ltd	100,000
Closing	Purchased stock on credit from M	180,000
Closing	purchased stock for cash	30,000
Closing	Sold entire stock to X ( 40% on credit)	330,000
Closing	Salary per month is 5000; salary is payable at the beginning of the next month
	11 months, paid (April 1 won’t come in the BS)
Closing	Rent per month	4,000
Closing	Rent paid for two years	96,000
Closing	Paid part of the creditors (M)by transferring the Z shares	60,000
Closing	Gave loan to Mr. Y ( interest rate: 12%) on 1st January2011 - 3 months, interest received in cash (assumption)	50,000
	Interest receivable on 31st March every year
Closing	Tax on Profit	30%
Closing	Declared 20% Dividend on 20th March to be paid on 5th April
	Dividend is payable as it is paid after financial year, but will come in IS as it is accrued within the financial year

Answer –

Balance Sheet			IS		CFS
Source of Funds	Opening BS	Closing BS	Income		Receipts
Capital	250000	250000			Opening Cash Balance	325000
Retained Profit		-39412.5
Loan (9%)	75000	75000	Sale of Stock	330000	Sale of Stock	198000
			Int of Loan (12%)	1500	Int of Loan Paid	1500
Dividend Payable		50000
Creditor M		120000
Total	325000	455587.5	Total	331500	Total	524500
Application of Funds			Expense		Payment
Cash in Hand	325000	185587.5
			Int on Loan	3375	Int on Loan Paid	3375
Shares Z		40000			Shares Z	100000
Stock / Goods		0	COGS	210000	Stock / Goods	30000
Debtor X		132000	Salary	55000	Salary Paid	55000
Advance Rent		48000	Rent	48000	Rent Paid	96000
Loan (12%)		50000			Loan (12%)	50000
			Tax	4537.5	Tax Paid	4537.5
			Dividend	50000
Total	325000	455587.5	Total	370912.5	Total	338912.5
			Profit	-39412.5	CIH (Cash in Hand)	185587.5