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Question
A company has an opening credit balance in Surplus, i.e., Balance in Statement of Profit and Loss of ₹ 1,00,000. During the year, it earned a profit of ₹ 75,000. It decided to transfer ₹ 15,000 to Debentures Redemption Reserve (DRR) and also proposed to pay dividend of ₹ 25,000.
How will be the appropriations shown in the financial statements?
Solution
Extract of Balance Sheet
as at …..
|
Particulars |
Note No. |
Amount (Rs) |
|
I. Equity and Liabilities |
|
|
|
1. Shareholders’ Funds |
|
|
|
a. Share Capital |
|
|
|
b. Reserves and Surplus |
1 |
1,50,000 |
|
2. Share Application Money Pending Allotment |
|
|
|
3. Non-Current Liabilities |
|
|
|
4. Current Liabilities |
|
|
|
a. Short-term Provisions |
4 |
25,000 |
|
Total |
|
|
NOTES TO ACCOUNTS
|
Note No. |
Particulars |
Amount (Rs) |
||
|
1 |
Reserves and Surplus |
|
||
|
|
(a) Surplus, i.e. Balance in Statement of Profit and Loss |
1,00,000 |
1,35,000 |
|
|
|
Add: Profit for the year |
75,000 |
||
|
|
Less: Appropriations |
|||
|
|
Transfer to Debenture Redemption Reserve |
(15,000) |
||
|
|
Proposed Dividend |
(25,000) |
||
|
|
(b) Debenture Redemption Reserve |
|
||
|
|
Transferred from Surplus i.e. Balance in Statement of Profit and Loss |
15,000 |
||
|
|
Total (a + b) [to be Shown in Balance Sheet against Reserves and Surplus] |
1,50,000 |
||
|
4 |
Short-term Provisions |
|
||
|
|
Proposed Dividend |
25,000 |
||
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