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Vertical statement VERTICAL BALANCE SHEET OF Anisha LTD. AS ON 31ST MARCH 2008 Rs. I) SOURCES OF FUNDS A) Funds/ Proprietors/ Owners Own/ Owned! Net worth Equity Share Capital: Equity Share Capital
Rs.
10
Preference Share Capital Add : Reserves & Surplus Capital Reserve Dividend Equalisation Reserve Securities Premium A/c General Reserve Profit & Loss A/c
2 1 2 1 1
Less: Ficticious Assets Profit & Loss A/c (Dr. Balance i.e. Asset Side) Preliminary Expenses Discount on issue of shares
1 0 1 1
2
2 3
5
3 2
5
B) Borrowed Funds/ Loan Funds/ Owed Funds i) Secured Loans: Debentures Bank Loan ii) Unsecured Loans: Public Deposits Loan from relative / director Total Capital Employed II) APPLICATION OF FUNDS A) FIXED ASSETS Goodwill Patent Land Furniture Less : Depreciation
5
15
7 22
Rs.
Less: CURRENT LIABILITIES Creditors Short Term Loan/ Bank Overdraft Provision for Tax Proposed Dividend Outstanding Expenses Total Capital Utilised
20
10 30 Rs.
Rs.
3 2 3 10 -3
B) INVESTMENTS Trade Investments G. P. Notes (Government notes) C) WORKING CAPITAL CURRENT ASSETS Stock Debtors Cash Short Term Investments / Marketable Investments Prepaid Expenses
Rs.
7
15
2 3
10 15 3 5 2
35
15 5 2 2 1
-25
10 30 1
Quick Assest: Current Assets - Stock – Prepayments Quick Liabilities: Current liabilities - Bank Overdraft - Advance receipts Fixed Liabilities = Borrowed Funds = Owed Funds Vertical Revenue Statement for JMD Ltd. for the year ended 31st March, 2008 Particulars Rs. Gross Sales: Cash Sales 100 Credit Sales 200 Less : Returns Net Sales Less : Cost of Goods Sold Opening Stock Add: Purchases 110 Less: Returns (10) Less : Closing Stock Add: Factory Expenses: Wages Power and Fuel/ Depreciation on Plant Gross Profit Add Operating Income Bad Debts Recovery Miscellaneous Income
50 20
Rs.
300 (10) 290 20 100 120 (10) 110
70
10 10
Less: Operating Expenses A) Administrative Expenses: Depreciation on Office Equipments All Office Expenses
10 30
40
B) Selling & Distribution Expenses: Showroom Expenses Depreciation on Delivery Van
10 10
20
C) Finance Expenses: Bank Charges/ Interest paid on loans Net Operating Profit Add: Non - Operating Income Profit on sale of plant Interest on Investments received Dividend Income received
10
5 10 10
Less: Non – Operating Expenses Loss on sale of plant Provision for claim for damages Net Profit Before Tax (NPBT) Less Tax Net Profit After (NPAT) Add: P & L balance b/f
10 5
Less: Appropriations Dividends Transfer to General Reserve Profit & Loss balance c/d/Retained Earnings BALANCE SHEET ITEMS Share Capital: Equity Share Capital 10% Preference Share Capital
Rs.
30 30
(180) 110
20 130
(70) 60
25 85
(15) 70 (35) 35 100 135
(60) 75
Fixed Assets Net Block (WDV) Goodwill 2
Reserves and Surplus Securities/ Share Premium General Reserve Profit & Loss A/c. P & L Appropriation A/c. Capital Reserve Dividend Equalisation Reserve Fictitious Assets Preliminary Expenses Discount on issue of shares or Debentures Profit & Loss Dr. bal. - Asset side Underwriting Commission Current Liabilities Creditors/ Suppliers/ Accounts Payable Bank Overdraft Provision for Taxation Outstanding/ Accrued Expenses Proposed dividend Bills Payable/ Acceptances given Unpaid Taxes Unclaimed Dividend Creditors for Goods/ Expenses/ Payables Fixed Deposit payable in one year Pension/ Gratuity/ Provident Fund Provision for Doubtful Debts Provision for Discount on Debtors Income received in Advance
REVENUE ITEMS: Administrative Expenses Salaries Electricity General Expenses Depreciation Dep. on Furniture Directors Fees Legal Charges Rent Printing arid Stationary Insurance Postage Rates and Taxes Audit Fees Telephone Expenses Miscellaneous/ Sundry Exp Selling and Distribution Sales Salaries Advertising Dep. on delivery Van Showroom Expenses Delivery Expenses/ Carriage Outward Exhibition/ Trade Fair Exp. Royalty on Sales Salesman Traveling
Patents Copyrights/ Trademarks Advance for Purchase of Mach Land & Bldg Plant & Mach Furniture Loose Tools Capital WIP Note: Accumulated Depreciation / Provision for Depreciation is to be deducted from Fixed Assets (also called as Gross Block) Current Assets Customer/ Debtors/ Book Debts/ Accounts Receivable Stock/ Inventories: Raw Material, WIP, Finished Goods, and Stores. Cash in hand, Cash at Bank Prepaid Exp/ Exp. Paid in Advance Short term Investments /Marketable Investments/ Current Investments/ Liquid Investments Bills Received/ Acceptances Received Advance Tax Deposits given Fixed Deposits with Bank Income Receivable on Investments Miscellaneous Current Assets Secured Loans 6% Debentures Bank Loan Term Loan Mortgage Loan Unsecured Loans Public Deposits Loan from Relative/ Friend Loan from Director
Finance Expenses Interest paid on Debentures Interest paid on Loans/Bank OD Bank Charges Bill Discounting Charges Discount allowed Bad Debts/ Provision for Doubtful Debts Non Operating Incomes Profit on sale of asset Dividend/ Int. received Rent from Asset let out Non Operating Expenses Loss on sale of asset Fictitious asset W/olf Loss by fire/ theft Provision For claim for damages Operating Incomes Bad Debts Recovery Miscellaneous Income. Royalty Received
3
Illustration 1 The following is the balance sheet of Tata Ltd., for the year ended 31st March 2009. Balance Sheet as at March 31, 2008 Liabilities Rs. Assets Rs. Share capital 6,50,000 Goodwill 25,000 Capital Reserve 2,500 Land 1,29,000 General Reserve 1,20,410 Premises 1,50,000 Contingency Reserve 42,500 Plant 2,34,395 Profit and loss a/c 18,777 Furniture 8,575 5% debenture 1,57,500 3% G.P. notes 71,400 Sundry Creditors 73,900 Stock 1,96,770 Proposed Dividend 75,000 Debtors 2,03,942 Provision for tax 25,000 Cash and bank 1,21,280 Advance tax 23,675 Preliminary expenses 1,550
Total Rs
11,65,587 Total Rs
11,65,587
Rearrange the above balance sheet in to vertical format and calculate the following (a) Current asset (b) quick assets (c) Intangible asset (d) Fictitious asset (e) fixed assets (f) proprietors fund ( h) working capital (i) Total funds employed (j) Secured loan Illustration 2 The following is the balance sheet and the profit and loss account of Reliance Ltd., for the year ended 31st March 2009. Balance Sheet as at March 31, 2009 (in thousands) Liabilities Rs. Assets Rs. Equity Share Capital 500 Trade Investments 200 Dividend Equalisation 70 Patents 30 General Reserve 110 Land and Building (at cost) 320 Profit and Loas A/c 190 Plant and Machinery (at cost) 650 6% Debentures 250 Cash at Bank 88 Bank Overdraft 150 Stock: Staff Provident Fund 80 Materials 90 Creditors 210 Finished Goods 160 Unpaid Dividend 10 Work-in-progress 60 310 Proposed Dividend 60 Sundry Debtors 230 Provision for Taxation 170 Less : Reserve for Doubtful Debts 8 222 Provision for Depreciation 250 Bills Receivable 30 on plant and Machinery Staff Provident Fund 80 Investments Deposits with Customs 30 Authorities 4
Advance for purchase of Machinery Preliminary Expenses
60 30
2,050 Total Rs.
2,050
Total Rs. Q.3) Convert the following revenue accounts of TATA LTD. into suitable form for analysis. Particulars Rs. Particulars Rs. To Opening Stock 75,000 By Sales To Purchases 2,20,000 Cash 1,00,000 To Wages 40,000 Credit 3,25000 To Factory Overheads 20,000 4,25,000 To Salaries: Factory 8,000 Less: Returns 5,000 4,20,000 Office 7,000 By Closing Stock 1,30,000 Sales 6,000 By Interest on Investment 5,000 To Electricity: Factory 1,000 By Profit on sale of Assets 18,000 Office 1,000 By Royalty 2,000 To Audit Fees 4,000 To Discount 3,000 To bad debts 7,000 To Advertising 6,000 To Showroom expense 4,000 To Delivery Expenses 5,000 To Depreciation Plant 10,000 Office Furniture 5,000 Delivery van 15,000 To Loss on sale of van 5,000 To Debenture Interest 10,000 To Directors Fees 12,000 To Legal Charges 6,000 To Rates and Taxes 1,000 To Traveling Expenses. 2,000 To Provision for tax 40,000 To Net Profit c/d 62,000 5,75,000 5,75,000
Q.4) Present the foil. P & L and Balance of Shahrukh ltd. in Vertical Form: Particulars Rs. Particulars To Opening Stock. 20,000 By Sales 1,80,000 To Purchases 1,09,000 Less: Returns 10,000 To Wages 3,000 By closing stock To Gross Profit 68,000 Total Rs 2,00,000 Total Rs To Salaries 16,000 By Gross Profit b/d To Rent, Rates, Taxes 8,000 By Profit on Sale of Plant To Printing 1,000 To Postage 1,000 To Misc, Expenses 4,000 To Advertisement 2,000 To Office Expenses 4,000 To Interest 3,000 To Loss on Sale of Assets 1,000 To Provision for taxation 15,000 To Net Profit 15,000 Total Rs. 70,000 Total Rs. To General Reserve 10,000 By Balance b/d. To Dividend 6,000 By Net Profit To Balance c/d. 1,000 Total Rs. 17,000 Total Rs.
Rs. 1,70,000 30,000 2,00,000 68,000 2,000
70,000 2,000 15,000 17,000 5
Home work section: Vertical Balance sheet Q.1) Following is the Balance sheet of Harvard Ltd. as on 31st March 2008. Prepare vertical balance sheet Liabilities Rs. Assets Rs. Share capital 1,50,000 Goodwill 20,000 Share Premium Account 5,000 Land and Building 80,000 General Reserve 60,000 Plant (at cost less dep.) 44,000 Profit and Loss account 17,000 Furniture (at cost less dep.) 3,000 6% Debenture 50,000 Investment (Trade) 80,000 Bank Loan (Long Term) 35,000 Debtors 70,000 Bank Overdraft 20,000 Stock 60,000 Sundry Creditors 60,000 Cash at Bank 40,000 Provision for Taxation 10,000 Prepaid expenses 5,000 Preliminary expenses 5,000 Total Rs. 4,07,000 Total Rs. 4,07,000 Q2) The following is the balance sheet of Reliance Ltd. as at 31.3.2008 Prepare a vertical balance sheet Liabilities Rs. Assets Preference Share Capital 36,000 Land Ordinary Share Capital 87,000 Plant & Machinery Share Premium 40,000 Vehicles General Reserve 40,000 Investments (Pension Funds) Profit & Loss Account 20,000 Debtors Depreciation Reserve: Stock Plant & Machinery 1,82,000 Bills Receivable Vehicles 24,000 Prepaid Expenses Long-term Loans 6,000 Bank Bank Overdraft 10,000 Cash Creditors 15,000 Preliminary Expenses Unpaid taxes 38,000 Capital work-in-progress Dividends (unclaimed) 3,000 Underwriting Commission Dividends (unpaid) 1,000 Pension Fund 3,000 Total Rs. 5,05,000 Total Rs.
Rs. 25,000 3,01,000 58,000 3,000 21,000 42,000 26,000 2,000 7,000 1,000 6,000 10,000 3,000
5,05,000
Vertical Profit and loss account 7Illustration 3 Profit & Loss Account for the year ending March 31, 2002 Particulars Rs. Particulars Rs. To opening Stock By Sales 2,000 Materials 90 By Stock Finished Goods 120 Material 90 Work in Progress 40 250 Finished Goods 160 To Purchase of Material 850 Work in Progress 60 310 To Wages 280 By Dividend of Investment 30 To Power 40 By Sale of Scrap 8 To Factory Expenses 110 To Office Salaries 80 To Misc. Expenses 90 To Selling Expenses 120 To Advertisements 80 6
To Preliminary 5 Expenses w/off To Debenture Interest 15 To Depreciation: Plant 60 Factory Building 12 72 To Provision for Taxation 170 To Proposed Dividend 60 To Balance of Profit 126 Total Rs. 2,348 Total Rs. 2,348 Illustration .4: The following is the profit and loss account of Hot-Shot Ltd., for the year ended 31st March 2002. Particulars To Opening Stock To Purchases To Wages To Factory Expenses To Office Salaries To Office Rent To Postage and Telegram To Directors’ Free To Salesmen’s Salaries To Advertising To Delivery Expenses To Debenture Interest To Depreciation: Office Furniture Plant Delivery van To Loss on Sale of Car To Income-Tax To Net Profit
Rs. Particulars 50,000 By Sales 1,10,000 Cash 33,000 30,000 Credit 1,72,000 20,000 2,05,000 4,000 Less : Returns 5,000 2,400 By Closing Stock 500 By Dividend on Investments By Profit on Sale of Plant 600 2,000 1,000 2,000 2,000
Rs.
2,00,000 80,000 1,000 2,000
1,000 3,000 2,000 500 17,500 14,500
Total Rs. 2,63,000 Total Rs. 2,63,000 You are required to prepare vertical income statement from the above so as to facilitate the income statements analysis.
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