3. From the following information prepare balance sheet with as many details as possible
Current ratio = 2.5, liquid ratio = 1.5, working capital = 600000 reserves and surplus = 400000, bank overdraft = 100000, there is no long term loans. Fixed assets to proprietary funds ratio = 0.75.
Answers
From the following information prepare balance sheet with as many details as possible
Explanation:
Computation of Current assets and Current Liabilities
Current Ratio (CR) = Current Assets (CA)/ Current Liabilities (CL) = 2.5
So, CA= 2.5 CL
Now, Working Capital = Current Assets(C.A) minus Current Liabilities (C.L) = Rs.60000
Therefore, CA - CL = 60000 0
2.5 CL-CL = 600000
1.5 CL = 600000
CL = 600000/1.5
C.L = Rs.40000 0
Now, C.A = 2.5 x 400000 = Rs.1000000
Computation of stock
Liquid ratio = Liquid assets/Current liabilities
Or, 1.5 = (Current Assets - Stock )/400000
Or, 1.5 = (10,00, 000 - Stock)/4,00,000
1.5 *400000 = 1000000-Stock
600000 = 1000000- Stock
Therefore, stock = 100000-600000 = 400000
Computation of Proprietary fund; Fixed assets; Capital and Sundry payables (creditors)
Fixed Assets to Proprietors Fund = Fixed Assets / Proprietors Fund
Therefore, Fixed assets = 0.75 Proprietary fund and
Net working capital = 0.25 Proprietary fund
Therefore Proprietary fund = 600000/0.25
Proprietary fund = 24,00,0000
and Fixed assets = 0.75 proprietary fund
= 0.75 of 24,00,000
Therefore, Fixed Assets = 18,00,000
Equity Capital = Proprietary fund - Reserves & Surplus
Therefore, Equity Capital = 2400000-400000
Equity Capital = 20,00,000
Sundry payables (creditors) = (Current liabilities - Bank overdraft)
= (400000 - 100000) = 300000
Sundry payables = 300000
Net Current Assets = (Current Assets - Stock) = 1000000-400000 = 600000
Balance Sheet
Liabilities Amt in INR Assets Amt in INR
Equity Capital 2000000 Fixed Assets 1800000
Reserves & surplus 400000 Stock 400000
Bank Overdraft 100000 Net Current Assets 600000
Sundry Payable 300000
__________________________________________________________
2800000 2800000
_________________________________________________________
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3. From the following information prepare balance sheet with as ...
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From the following information prepare balance sheet with as many details as possible
Current ratio = 2.5, liquid ratio = 1.5, working capital = 600000 reserves and surplus = 400000, bank overdraft = 10000, there is no long term loans. Fixed assets to proprietary funds ratio = 0.75.