11.
Prepare Trading, Profit & Loss account and Balance
Sheet for the following data:
Net current assets
Rs. 1,00,000
Paid up capital
Rs. 3,00,000
Current ratio
1.8:1
Liquid ratio
1.35:1
Debt collection period
36.5 days
Fixed assets to shareholders equity
80%
Gross profit ratio
25%
Net profit to paid up capital
20%
Stoc tur
ratio
5 times
Answers
Answer:
as at 31.3.2018
Capital and Liabilities Rs. Assets Rs.
Share Capital 5,00,000 Fixed assets 6,00,000
Reserves & Surplus 2,50,000 Stock 2,00,000
Long term borrowings 1,50,000 Debtors 2,50,000
Current liabilities 2,00,000 Bank 50,000
11,00,000 11,00,000
Working Notes
Assume Current Liabilities 1.0
Current Assets are 2.5
Therefore, Difference or working capital 1.5
Given, Working Capital Rs. 3,00,000
Current Assets =Rs.3,00,000×2.5/1.5= Rs. 5,00,000
Current Liabilities = Rs. 2,00,000
Given, Liquidity Ratio = 1.5
Liquid Assets Rs.2,00,000×1.5= Rs. 3,00,000
Therefore Stock = (Current Assets - Liquid Assets)=
Rs.5,00,000−Rs.3,00,000
Stock =Rs.2,00,000
Cost of Sales (as stock turnover is 6)=Rs.2,00,000×6= Rs. 12,00,000
Sales (G.P ratio 20%)=Rs.12,00,000+[(20/80)×12,00,000]
Sales =15,00,000
Fixed Assets =Rs.12,00,000/2=Rs.6,00,000
Debtors =Rs.15,00,000/6=Rs.2,50,000
Net worth =Rs.6,00,000×1/0.8=Rs.7,50,000
Reserve and Surplus, 1/3rd of net worth =Rs.2,50,000
Share Capital =Rs.7,50,000−Rs.2,50,000=Rs.5,00,000
Alternatively, candidates may use fixed assets turnover ratio for computation of sales
The balance of Debtors can be calculated as a balancing figure in the balance sheet.