Question

Auto Parts Manufacturing Co. Ltd was registered with a nominal capital of Rs.10 crore divided into shares of Rs.10 each, of which 40 lakhs shares had been issued and fully called.
The following is the Trial Balance extracted on 31st March, 2012.
Rs ‘000 Rs ‘000
Stock (1st April, 2011) 18642
Manufacturing Wages 10,974
Manufacturing Expenses 1,924
Purchases and Sales 71821 1,16,990
Machinery Repairs 861
Carriage Inwards 491
Carriage Outwards 926
Advance payment of Income Tax 1429
Bank Loan (at 18%) 5000
Interest on Loan 450
Debtors and Creditors 16440 9222
Profit and Loss Account; 1st April, 2011 864
Bank Current Account 10686
Cash in Hand 192
Leasehold Factory 16421
Plant and Machinery 12840
Loose Tools 1250
Share Capital 40000
Calls in Arrear 100
Rates and Electricity 1761
Directors Fees and Remuneration 1200
Office Salaries 1300
Auditors’ Fees 125
Office Furniture 500
Commission 860
Returns 1264 981
Preliminary Expenses 600
1,73,057 1,73,057

You are required to prepare Statement of Profit and Loss for the year ending March 31, 2012 and Balance Sheet as at that date after taking into consideration the following adjustments:
1. Write off one third of Preliminary Expenses.
2. Depreciation is to be provided on:
- Plant and Machinery @ 15%; and
- Office Furniture @ 10%
3. Manufacturing Wages Rs.189 thousand and Office Salaries Rs.120 thousand had accrued due.
4. Provide for Interest on Bank Loan for 6 months.
5. The Stock was valued of Rs.12484 thousand and Loose tools at Rs.1,000 thousand.
6. Provide Rs.850 thousand on Debtors for Doubtful Debts.
7. Provide further Rs.312 thousand for Discount on Debtors.
8. Make a Provision for Income Tax @ 31%
9. The directors recommend dividend at 15% for the year ending 31st March 2012 after transferring 5% of net profits to General Reserve. Make a provision for dividend distribution tax @ 17%

Answer 1

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Answer 2

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