Question 11 Chapter 4 of +2-B – USHA Publication 12 Class

Question 11 Chapter 4 of +2-B

Question 11 Chapter 4 of +2-B

I. Liquidity Ratios

11. (Short Term Financial Position) Following is the balance sheet of Crescent Chemical Works Limited as of 31st March 2018

Balance Sheet
Particular Note No.
I. Equity and Liabilities     
Shareholders’ Funds    
6% Preference Share Capital: Issued and Paid-up   15,000
Equity Share Capital: Issued and Paid-up   55,000
Reserves and Surplus    
General Reserve   25,000
Reserves for Contingencies   10,000
Non-Current Liabilities    
Long-term Borrowing :    
6% Mortgage Debentures   25,000
Current Liabilities     
Trade Payable   11,000
Other Current Liabilities :    
Outstanding Expenses   2,000
Output IGST   2,000
Output CGST   2,500
Output SGST   2,500
    1,50,000
II. Assets :    
Non-Current Assets    
Tangible Assets    
Land and Building   20,000
Plant and Machinery   22,000
Furniture and Fixtures   3,000
Current Assets    
Trade Investment   5,000
Inventory   50,000
Trade Receivable   30,000
Prepaid Expenses   2,000
Cash at Bank   18,000
    1,50,000

 

The solution of Question 11 Chapter 4 of +2-B: – 

 

Current Assets = Inventories + Trade receivables + Trade Investments + Prepaid expenses + Cash    
  = ₹ 50,000 + ₹ 30,000 + ₹ 5,000 + ₹ 2,000 + ₹18,000
Current Assets = ₹ 1,05,000

 

Current Liabilities = Trade payable + Outstanding Expenses + Output IGST + Output CGST + Output SGST
  = ₹ 11,000 + ₹ 2,000 + ₹ 2,000 + ₹ 2,500 + ₹ 2,500
Current Liabilities = ₹ 20,000

 

Current Ratio= Current Assets
Current Liabilities

 

Current Ratio = ₹ 1,05,000
₹ 20,000
     
  = 5.25 : 1

 

Quick Assets = Trade receivables + Trade Investments + Cash
  = ₹ 30,000 + ₹ 5,000 + ₹ 18,000
Quick Assets = ₹ 53,000
Current Liabilities = ₹ 20,000
     
Quick Ratio = Quick Assets
Current Liabilities
     
  = ₹ 53,000
₹ 20,000
     
Quick Ratio = 2.65 : 1

What are Liquidity Ratios – Formulas and Examples

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Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

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T.S. Grewal’s Analysis of Financial Statements

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