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Illustration 19. ABC Limited gives you its Balance Sheet as on 31st March, 2010 and its projected Profit and Loss Account for the year ended 31st March, 2011: Balance Sheet Liabilities Amount Assets Amount Share Capital Fixed Assets : Equity Shares of Rs. 100 Machinery at cost 7,00.000 each fully paid 6,00,000 Less: Depreciation 1,40,000 5,60,000 Reserves and Surplus: Motor car at cost 80,000 Securities Premium 20,000 Less: Depreciation 30,000 50,000 General Reserve 1,30,000 Current Assets: Profit and Loss Account 65,000 Stock 5,60,000 Secured Loans : Book Debts 2,20,000 8% Debentures 3,00,000 Bank balances 1,20,000 Current Liabilities: Loans & Advances : Sundry Creditors 2,85,000 Advance Income Tax 1,00,000 Provision for Taxation 1,40,000 Miscellaneous Expenditure: Proposed Dividend (Equity) 90,000 Preliminary Expenses 20,000 16,30,000 16,30,000 a 60 Projected Profit and Loss Account for the year ended 31st March, 2011 To Opening Stok 5,60,000 By Sales To Purchase 14,40,000 Cash 3,70,000 To Wages 80,000 Credit 18,00,000 To Manufacturing Expenses 40,000 By Stock 4,20,000 To Office & Administration Exp. 50,000 By Profit on Sale of Machinery 10,000 To Selling & Distribution Exp. 30,000 To Interest 24,000 To Depreciation: Machinery 56,000 Car 14,000 70,000 To Preliminary Expences 10,000 To Provision for Taxation 1,36,000 To Proposed Dividend on Equity 1,00,000 To Balance 60,000 26,00,000 26,00,000 The company proposes to issue one equity share for two equity shares with nominal value of Rs. 3,00,000 at a premium of 10%. Machinery will be acquired for Rs. 1,00,000. The cost of machinery to be sold in the year ended 31st March, 2011 is Rs. 80,000 with a depreciation provision of Rs. 45,000 It is expected that: (1) Tax liability upto 31st March, 2010 will be settled for Rs. 1,20,000 within 31st March, 2012. (ii) Advance Income Tax amounting to Rs. 1,30,000 is proposed to be paid in 2010-2011. (iii) Book Debts will be 10% mor than warranted by the credit period of two months. (iv) Creditors for goods will continue to extend one and half months' credit and manufacturing expenses outstanding at the end of March, 2011 will be Rs. 5,000. You are required to: (1) Draft the Company's projected Balance Sheet as on 31st March, 2011. (ii) Draft the statemet showing cash flows during the year ended 31st March, 2011 using direct method

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