Question 4 Chapter 1 - V.K. Publication Class 12 Part 2

Question 4 Chapter 1 – V.K. Publication Class 12 Part 2 – 2021

Table of Contents

The solution of Question 4 Chapter 1 – V.K. Publication Class 12 Part 2: –

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

4. The following opening balances were recorded in case of Speed Tractors Ltd.
Debenture Redemption Reserve Rs. 75,000
Capital Redemption Reserve Rs. 10,000
Surplus, i.e., Balance in Statement of Profit and Loss Rs. 1,50,000
Profit made during the year ended 31st March, 2019 amounted to Rs. 2,50,000. 1t was decided to transfer Rs. 50,000 to Debenture Redemption Reserve. The company also proposed a final dividend of Rs. 80,000 on its equity shares and the last year’s proposed dividend was Rs. 75,000.
Determine how the above shall be shown in the Notes to Accounts on Reserves and Surplusand what will be its balance to be disclosed on the face of the Balance Sheet.

The solution of Question 4 Chapter 1 – V.K. Publication Class 12 Part 2: –

NOTES TO ACCOUNT

Particulars			Amount (Rs.)
Reserve and Surplus:
(a)Debentures Redemption Reserve		75,000
Opening Balance		50,000	1,25,000
(b) Capital Redemption Reserve			10,000

(c) Surplus, i.e., Balance in Statement of Profit and Loss
Opening Balance	1,50,000
Add: Profit during the year	2,50,000	4,00,000

Less: Appropriations

Transfer to DRR	50,000

Proposed Dividend (for the year ended 31st March, 2018)	75,000	1,25,000	2,75,000

Balance of Reserves and Surplus [as shown in Balance Sheet (a) + (b)+(c)]			4,10,000

Note: Proposed dizidend for the current year Rs. 80,000 (for the year ended 31st March, 2019) will be shown as Contingent liability in Noles-to-Accounts.