Question 2 Chapter 2 VK Publications Class 12 Part 2

Question 2 Chapter 2 VK Publications Class 12 Part 2 – 2021

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The solution of Question 2 Chapter 2 VK Publications Class 12 Part 2: –

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

2. Given below are the Balance Sheets of Essex Ltd. for the years ended on 31st March, 2018 and 2017. Prepare a Comparative Balance Sheet and comment upon the changes over two years.

Particulars	Note No.	1st March,2018 (Rs.)	31st March, 2017 (Rs.)
I.EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital		3,00,000	3,00,000
(b) Reserves and Surplus		65,000	50,000
2. Non-Current Liabilities
(a) Long-term Borrowings		1,50,000	1,00,000
3. Current Liabilities
(a) Trade Payables		2,00,000	1,50,000
Total.		7,65,000	6,00,000

II. ASSETS
1. Non-Current Assetd
(a) Fixed Assets		6,15,000	5,00,000
2. Current Assets
(a) Cash and Cash Equivalents		1,50,000	1,00,000
Total		7,65,000	6,00,000

The solution of Question 2 Chapter 2 VK Publications Class 12 Part 2: –

Comparitive Balance Sheets of Essex Ltd. As at 31st March, 2017 & 2018

Particulars	Note	2016-2017 Rs.	2017-2018 Rs.	Absolute Change Rs.	Percentage Change %
1		2	3	4	5
		A	B	B – A = C	C/A X 100 = D
I. Equity & Liabilities
1. Shareholder’s Fund
a. Share Capital		3,00,000	3,50,000	50,000	16.67
b. Reserve & Surplus		50,000	65,000	15,000	30.00
2. Non – current Liabilities
a. Long term Borrowings		1,00,000	1,50,000	50,000	50.00
3. Current Liabilities
a. Trade payable		1,50,000	2,00,000	50,000	33.33
Total		6,00,000	7,65,000	1,65,000	27.50

II. Assets
1. Non – current Assets
a. Fixed Assets		5,00,000	6,15,000	1,15,000	23.00
2. Current Assets
a. Cash & Cash equivalents		1,00,000	1,50,000	50,000	50.00
Total		6,00,000	7,65,000	1,65,000	27.50

Comment: The analysis of the above Comparative Balance Sheet gives the following conclusions:
(i) Share Capitäl has increased by Rs. 50,000, i.e .,16.67% increase.
(ii) Reserves and Surplus have increased by Rs. 15,000, i.e., 30% which reflects the increase in profits.
(iii) Long-term Borrowings has increased by 50% which shows the increased participation of debt capital in business.
(iv) Increase of fixed assets means purchase of fixed Assets partly by issue of share capital and partly by debt capital.
(v) Current Liabilities have increased by 33.33% whereas Current assets have increased by 50%. It has resulted in the imcrease in working capital of the firm.