Question 5 Chapter 1 – V.K. Publication Class 12 Part 2 – 2021

Question 5 - CH-1 Solution
Question 5 - CH-1 Solution

Question 5 Chapter 1 – V.K. Publication Class 12 Part 2 – 2021

5. Active Machines Ltd. had the following opening balances in the Reserves and Surplus:

Transfer to Securities Premium Reserve​

Particulars Rs.
Debenture Redemption Reserve 2,00,000 2,00,000
Securities Premium Reserve 4,00,000
Surplus, i.e., Balance in Statement of Profit and Loss 18,00,000
The following appropriations to the profit earned were proposed:  
Transfer to Debenture Redemption Reserve 8,00,000
Transfer to General Reserve 2,00,000
Transfer to Securities Premium Reserve 6,00,000

Profit after tax during the year amounted to Rs. 10,00,000.
Determine the amount to be shown in Notes to Accounts on Reserves and Surplus.
The company proposed a final dividend of Rs. 4,00,000 on its equity shares against last year’s proposed dividend of Rs. 6,00,000.

The solution of Question 5 Chapter 1 – V.K. Publication Class 12 Part 2: –

NOTES TO ACCOUNT

Particulars     Amount (Rs.)
Reserve and Surplus:      
(a) Debentures Redemption Reserve      
Opening Balance 2,00,000    
 Add: Transfer during the year 8,00,000   10,00,000
       
(b) Securities Premium Reserve
     
Opening Balance 4,00,000    
 Add: Transfer during the year
6,00,000   10,00,000
       
(c) General Reserve
     
Opening Balance      
 Add: Transfer during the year
2,00,000   2,00,000
       
(c) Surplus, i.e, Balance in Statement of Profit and Loss
     
Opening Balance 18,00,000    
Add: Profit during the year 10,00,000   28,00,000
       
Less: Appropriations      
Transfer to DRR 8,00,000    
Transfer to Securities Premium Reserve 6,00,000    
Transfer to General Reserve 2,00,000    
Proposed Dividend (previous year) 6,00,000 22,00,000 6,00,000
       
Balance of Reserves and Surplus [as shown in Balance Sheet (a) + (b)+(c)+(d)]
    28,00,000

Proposed dividend Rs. 4,00,000 (for the current year) will be shown in Notes-to-Accounts.

Financial Statements of a Company and Its formats

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

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

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

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

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