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Ipcc a/c paper doubt

shreya (student) (67 Points)

28 May 2014  
Was ques 2 (a) of ipcc a/c paper correct?? I found the given profit insufficient to fulfil the required distribution..

 1 Replies

N.Naveena Maheswara Rao (Assistant manager for accounts)   (1091 Points)
Replied 28 May 2014

you are true. Question may be wrong ?(share value should be 10/-). How ever below is the suggested answer.

 

Current year Profit

1,000,000

Less: Depreciation

37,500

Tax provision

120,000

Balance available for appropriations

842,500

Less: Transfer to reserve (842,500 * 25%)

210,625

Staff bonus provision (75,000 X 100 X 20% X 10%)

150,000

Balance available for distribution of dividend

481,875

Less: Preference dividend (12,000 X 100 X 15%)

180,000

Balance

301,875

Less: Carried forward profit (12,000 X 100 X 14%)

168,000

Balance for additional dividend

133,875

 

Distribution of additional dividend

Balance for additional dividend

133,875

To preference share holders (1/3)

44,625

To equity share holders (2/3)

89,250

 

Net balance of P&L

Op. balance in P&L

150,000

Carried forward current year profit

            168,000

Net balance in P&L

318,000

 


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