Question 6 Chapter 1 of +2-B

Table of Contents

The solution of Question 6 Chapter 1 of +2-B: –

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)

6. A company has an opening credit balance in surplus, i.e., Balance in the statement of profit and loss of Rs 1,00,000. During the year, it earned a profit of Rs 75,000. It decided to transfer Rs 15,000 to debentures redemption reserve (DRR) and a dividend of Rs 25,000.
How will be appropriations shown in the financial statements?

The solution of Question 6 Chapter 1 of +2-B: –

Particular (1)	Note No. (2)	Figures as at the end of the Current Reporting Period (3)	Figures as at the end of the Previous Reporting Period (4)
I. Equity and Liabilities
1. Shareholders’ Funds
(a) Share Capital
(b) Reserves and Surplus	1	1,75,000
		1,75,000

Particular (1)		Amount
Reserves and Surplus
(i) Balance in the statement of profit and loss	1,00,000
Add: Profit during the year	75,000
Less: Transfer to debentures redemption reserve	(15,000)
Proposed dividend	(25,000)	1,35,000
(ii) Debenture redemption reserve
Transfer from surplus, i.e., statement of profit and loss		15,000
Total of (i) and (ii) shown in the balance sheet under the surplus		1,50,000
Contingent liabilities
Proposed dividend		25,000
		1,75,000