Mutual Engineers Ltd. have authorised capital of Rs.50 lakhs, divided into 5,00,000 equity shares of Rs.10 each. Their books show the following balances as on 3 1.3.2011:

 

Rs

 

Rs

Stock 1.4.2010

6,65,000

Bank current account

20,000

Discount and rebates

30,000

Cash in hand

8,000

Carriage inwards

57,500

Debenture interest

 

Patterns

3,75,000

(for ½ year to 30.9.2010)

20,000

Rates, taxes and insurance

55,000

Interest banks (Dr.)

91,000

Furniture and fixtures

1,50,000

Preliminary expenses

10,000

Materials purchased

12,32,500

Calls in arrears

10,000

Wages

13,05,000

Equity share capital

 

Coal and coke

63,000

(2,00,000 share of

 

Freehold land

12,50,000

10 each)

20,00,000

Plant and machinery

7,50,000

8% Debentures

5,00,000

Engineering tools

1,50,000

Bank overdraft

7,57,000

Goodwill

3,75,000

Sundry creditors (for goods)

2,40,500

Sundry debtors

2,66,000

Sales

36,17,000

Bills receivable

1,34,500

Rents (Cr.)

30,000

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15,000

Transfer fees

6,500

Commission and brokerage

67,500

Profit and Loss A/c (Cr.)

67,000

Business expenses

56,000

 

 

Repairs

46,500

 

 

Bad debts

25,500

 

 

The stock (valued at cost or market value whichever is lower) as on 31.3.2011 was Rs.7,08,000. Outstanding liability for wages Rs.25,000 and business expenses Rs.25,000.

Dividend declared @ 8% on paid up capital.

To charge depreciation: Plant and Machinery @ 15% Engineering Tools @ 20%, Patterns @ 10% and furniture and fixture @ 10%. Provide 2% on debtors as doubtful debts after writing off Rs.21,500 as bad debts. Write off preliminary expenses Rs.5,000 and create Debenture Redemption Reserve Rs.50,000. Provide Rs.1,30,000 for income tax.

Prepare Profit and Loss Account for the year ended 31.3.2011 and Balance Sheet, as on that date, in accordance with the Companies Act, 1956, giving as much information as necessary. Ignore previous year‘s figures.