This assignment consists of 5 analytical covering the syllabus till Analysis of Financial Statements.

Problem 1:

Journalize the following transactions in the books of Mr. Walter:

a) Paid rent of building $ 12,000 half of the building is used by the proprietor for residential use.

b) Paid fire insurance of the above building in advance $ 1,000.

c) Paid life insurance premium $ 2,000.

d) Paid income-tax $ 3,000.

e) Salary due to clerk $ 500.

f) Charge depreciation on furniture @ 10% p.a. for 1 month (furniture $ 12,000).

g) Provide interest on capital ($ 60,000) at 15% p.a. for 6 months.

h) Charge interest on drawing (10,000) at 18% p.a. for 6 months.

i) Provide interest on loan to Ram ($ 100,000) at 18% p.a. for 2 months.

j) Charge interest on loan to Shyam ($ 200,000) at 18% p.a. for 2 months.

k) Received commission $ 1,000 half of which is in advance.

l) Brokerage due to us $ 500.

Problem 2:

From following figures extracted from the books of Mr. XYZ, you are required to prepare a Trading & Profit & Loss Account for the year ended 31^st March, 2008 and a Balance Sheet as on that date after making the necessary adjustments.

Adjustments:

a) Stock on 31^st March, 2008 was valued at $ 72,600

b) A new machine was installed during the year costing $15,400 but it is not recorded in the books as on payment was made for it. Wages $ 1,100 paid for its erection has been debited to the wages account.

c) Depreciate :

a. Plant & machine by 33.33%

b. Furniture by 10%

c. Freehold property by 6%

d) Loose tools were valued at $ 1.760 as on 31.3.2008

e) Of the sundry debtors Rs.660 are bad and should be written off.

f) Maintain a provision of 5% on sundry debtors for doubtful debts.

g) The manager is entitled to a commission of 10% of the net profits after charging such commission.

Problem 3:

Following is the Trial Balance of M/s. Trinity Foods as on 30^th June 2007 (after closing Nominal Accounts). Prepare a Balance Sheet on the basis of this trial balance.

Problem 4:

Given below are the financial statements of Safal Enterprises, using the tool of ratio analysis comment on the profitability and liquidity position of the firm for the year 2006-07. Total no. of shares outstanding for the firm is 2.69crores. In the view of growth opportunities in the near future the firm has been maintaining a policy of 45% payout.

Summarized P & L of Safal Enterprises

For the year ended 31 March

Balance Sheet of Safal Enterprises

Problem 5:

Given below are the balance sheets of the two firms- Gloria Ltd and Victoria Ltd as on 31^st March 2007.

1. Can the financial positions of the two firms be compared assuming that the two firms fall in the same industry?