Practice Problems

1.Prepare the ‘Funds from Operation’ from the following information of Gowtham Bros.

To Salaries 40000 By Gross Profit 100000

To Rent 15000 By profit on sale of asset 5000
To Provision for bad 5000
debts
To preliminary expenses 10000
written off
To Goodwill written off 5000
To Depreciation on 5000
assets
To loss on sale of Plant 2000
To provision for tax 5000
To Net profit 18000
105000 105000

2.Compute the following Ratios from the data given below:

(i) Debtors Turnover (ii) Debt Collection Period

(iii) Gross Profit ratio (iv) Net Profit ratio
(v) DPS (vi) Price-earning Ratio
(vii) Dividend Payout ratio (viii) Working Capital Turnover
(ix) Dividend Yield Ratio (x) Return on Capital Employed

Rs. Rs.
Sales 10,00,000 Purchases 6,00,000
Sales Returns 10,000 Purchase Returns 15,000
Opening Stock 20,000 Closing Stock 5,000
Selling Expenses 40,000 Administration expenses 12,000
Income from Investments 15,000 Debtors 2,50,000
Bills Receivable 1,00,000 Current Assets 8,40,000
Current Liabilities 3,56,000 Equity Capital
(Rs.10 per share) 50,00,000
9% Debentures 25,00,000 Reserves 5,50,000
Dividend paid at 20% per share Tax paid 35,000
Market price per share 150
3.From the following trial balance of Evergreen and Company, prepare trading and profit
and loss account and balance sheet 31st December 2008

Trial Balance as on 31st December 2008

Particulars Debit (Rs.) Credit (Rs.)
Cash in hand 2,400
Purchases 340,000
Stock as on 1st January 2008 70,000
Debtors 100,000
Plant and Machinery 120,000
Furniture 30,000
Bills Receivable 40,000
Rent and Taxes 20,000
Wages 32,000
Salaries 37,600
Capital 300,000
Bills Payavble 40,000
Creditors 52,000
Sales 400,000
Total - 692000 692000

Additional Information:
(a) Closing Inventory as on 31st December 2008 – Rs.50,000.
(b) Outstanding wages – Rs.5,000.
(c) Depreciation on Plant and Machinery at 10% and Furniture at 5%