Question 117 Chapter 4 of +2-B – USHA Publication 12 Class

Q-117- CH-4 Book 2 - Usha Pub. +2 Book 2020 - Solution

Question 117 Chapter 4 of +2-B

Miscellaneous (Analytical Questions)

117. (Quick Ratio/Inventory T/O Ratio/Return on Shareholders’ Investment) The following are the Summarised Statement of Profit and Loss of Hindustan Products for the year ended 31.3.2018 and the Balance sheet of the company as of that date.

 STATEMENT OF PROFIT AND LOSS Particulars ₹ Revenue from Operations 8,00,000 Less : Expenses Purchases 5,45,000 Changes in Inventories (1,00,000) (Opening Inventory – Closing Inventory) (₹ 99,000 – ₹ 1,99,000) Direct Expenses 15,000 Selling & Distribution Expenses 2,40,000 Loss on Sale of Assets 40,000 7,40,000 Net Profit 60,000

 BALANCE SHEET Particulars ₹ I. Equity and Liabilities Shareholders’ Funds Equity Share Capital 2.90.000 Reserves and Surplus Surplus in Statement of Profit and Loss 60,000 Current Liabilities Trade Payable 1,15,000 Outstanding Expenses 15,000 4,80,000 II. Assets : Non-Current Assets Tangible Assets Land 2,30,000 Current Assets Inventory 1,99,000 Trade Receivable 21,000 Cash 30,000 4,80,000

Calculate the following ratios
(i) Quick ratio (ii) Inventory Turnover Ratio (ii) Return on Shareholders Investment

The solution of Question 117 Chapter 4 of +2-B: –

 (i) Quick Ratio = Quick Assets Current Liabilities = ₹ 51,000 ₹ 1,30,000 = 0.39 : 1

 (ii) Inventory Turnover Ratio = Cost of goods sold Average Inventory = ₹ 4,60,000 ₹ 1,49,000 = 3.08 times

 (i) Return on investment Ratio = Net Profit X 100 Shareholders Funds = ₹ 60,000 X 100 ₹ 3,50,000 = 17.14%

Working Notes:-

 Quick Assets = Trade Receivable + Cash = ₹ 21,000 + ₹ 30,000 = ₹ 51,000 Current Assets = Inventory + Trade Receivable + Bank + Cash = ₹ 78,400 + ₹ 36,000 + ₹ 10,000 + ₹ 2,000 = ₹ 1,26,400 Current Liabilities = Trade Payable + Outstanding Expenses = ₹ 1,15,000 + ₹ 15,000 = ₹ 1,30,000 Cost of goods sold = Opening stock + Purchases + Direct Expenses – Closing Stock = ₹ 99,000 + ₹ 5,45,000 + ₹ 15,000 – ₹ 1,99,000 = ₹ 4,60,000 Shareholders’ Funds = Share capital + Surplus in Statement of Profit & Loss = ₹ 2,90,000 + ₹ 60,000 = ₹ 3,50,000
 Average Inventory = Opening Inventory + Closing Stock 2 = ₹ 99,000 + ₹ 1,99,000 2 = ₹ 1,49,000

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

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

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