Question 2 The following is the Trial Balance of Shivam Ltd as on 31st March, 2024 : Particulars Dr. ( 000) Particulars Cr. ( 000) Land at Cost 148...

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Question 2 The following is the Trial Balance of Shivam Ltd as on 31st March, 2024 : Particulars Dr. ( 000) Particulars Cr. ( 000) Land at Cost 148 Equity Share of 10 each 200 Plant & Machinery at Cost 520 10% Debenture of 100 each 135 Debtors 65 General Reserve 90 Closing Stock 58 Profit & Loss Ale 48 Bank 14 Security Premium 27 Adjusted Purchases 226 Sales 473 Factory Expenses 40 Creditors 35 Administration Expenses 22 Provision for Depreciation 116 ADVANCED ACCOUNTING Selling Expenses 20 Suspense A/c 3 Debenture Interest 14 Total 1,127 Total 1,127 Additional Information: • On 31st March, the Company issued Bonus Shares to the Shareholders on 1 : 2 basis (one equity share issued as bonus for every 2 equity shares held). No entry relating to this has yet been made. • The Authorized Share Capital of the Company is 35,000 Equity Shares of 10 each. • The Company, on the advice of an independent valuer, revalued the Land at 2,45,000. • The Directors declared a Dividend of 10% on 5th April, 2024 and also transferred profit @ 10% to General Reserve. • Suspense Account of 3,000 represents cash received for the Sale of some Machinery on the 1st day of the financial year 2023-24. Cost of this Machinery was 10,000 and Accumulated Depreciation thereon being 8,000. • Depreciation is to be provided on Plant & Machinery at 10% on Cost. • Provision for Income tax is required@ 30%. You are required to prepare Shivam Ltd.'s Profit and Loss A/c for the year ended 31st March, 2024 and Balance Sheet as at that date as per the provisions of the Companies Act, 2013 after considering the above information. Ignore previous year figures. (14 Marks)

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Option descriptive: Correct Option. Solution: Shivam Limited Balance Sheet as at 31st March 2024 Particulars Note No. (in 000) I. Equity and Liabilities 1. Shareholders' funds (a) Share capital 1 300.00 (b) Reserves and Surplus 2 232.70 2. Non-Current liabilities (a) Long term borrowings 3 135.00 3. Current liabilities (a) Trade Payables 35.00 (b) Short-Term Provisions 30.30 Total 733.00 II. Assets 1. Non-current assets (a) Property, Plant and Equipment and Intangible assets (i) Property, Plant and Equipment 4 596.00 2. Current assets (a) Inventories 58.00 (b) Trade receivables 65.00 (c) Cash and cash equivalents 14.00 Total 733.00 Shivam Limited Statement of Profit and Loss for the year ended 31st March 2024 Particulars Notes (in ‘000) I. Revenue from operations 473.00 II. Other Income 5 1.00 III. Total Income 474.00 IV. Expenses: Purchases 226.00 Finance costs 14.00 Depreciation and Amortisation expenses (10% of 510∗) 51.00 Other expenses 6 82.00 ∗ 520 (Plant and machinery at cost) – 10 (Cost of plant and machinery sold) ADVANCED ACCOUNTING Total Expenses 373.00 V. Profit before Tax (III-IV) 101.00 Tax Expense: Current tax (30.30) Profit for the period (after tax) 70.70 Notes to accounts (in 000) 1. Share Capital Equity share capital Authorised 35,000 shares of 10 each 350.00 Issued, subscribed & paid-up 20,000 shares of 10 each fully paid up 200.00 Add: 10,000 Bonus Shares issued during the year 100.00 300.00 2. Reserves and Surplus Securities Premium Account Opening Balance Less: Utilised for bonus issue 27.00 27.00 0.00 Revaluation reserve (2,45,000 – 1,48,000) 97.00 General Reserve 90 Less: Utilized for bonus issue (73) 17.00 Add: Transfer from Profit & loss @ 10% 7.07 24.07 Profit & loss Balance Opening balance 48.00 Profit for the period 70.70 Appropriations Transfer to General Reserve @ 10% (7.07) 111.63 232.70 3. Long term borrowing 10% Debentures 135.00 4 Property, Plant and Equipment Land Opening balance 148.00 Add: Revaluation adjustment 97.00 Closing balance 245.00 Plant and Machinery Opening balance 520.00 Less: Disposed off (10.00) 510.00 Less: Depreciation (1,16,000-8,000+51,000) (159.00) Closing balance 351.00 Total 596.00 5 Other Income Profit on sale of machinery: Sale value of machinery 3.00 Less: Book value of machinery (10,000-8,000) (2.00) 1.00 6 Other expenses: Factory expenses 40.00 Selling expenses 20.00 Administrative expenses 22.00 82.00 The final dividend will not be recognized as a liability at the balance sheet date (even if it is declared after reporting date but before approval of the financial statements) as per Accounting Standards. Hence, it has not been recognized in the financial statements for the year ended 31 March 2024. Such dividends will be disclosed in notes only. ADVANCED ACCOUNTING Working note: Bonus Shares Issue: • Bonus shares are issued in a 1:2 ratio, so for every 2 equity shares, 1 bonus share is issued. • Equity Share Capital = 2,00,000 / 10 = 20,000 shares. • Bonus Shares = 20,000 / 2 = 10,000 shares × 10 = 1,00,000. Alternatively, since, the amount of interest on 10% 1,35,000 Debentures comes to Rs 13,500 while the Debenture Interest in the trial balance is listed as 14,000, the difference of 500 (13,500 - 14,000) may be treated as an advance payment.

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