(6) Stock as on 31.3.2014 = (2x Average stock) - Opening stock = (2 50,000) - 60,000 = 340,000 9,00,000 (7) Debtors on 31.3.2014 - 1/9th of sales = 1,00,000 9 (8) Creditors on 31.3.2014 - 1/5th of material consumed 33,60,000 = 372,000 5 (9) Cash and Bank Balance Cash and Bank Account Dr. Cr 20,000 25.000 To Opening Balance Debentures Profit - 15% on sale before depreciation (Depreciation 45,000 Profit 90.000) Stock (decrease) By Debtors (increase) Creditors (decrease) Interest-debentures Fixed assets Preference dividend Equity-dividend Tax on distributed profit (@15%) Closing balance (balancing figure) 20.000 8,000 10.200 1,00,000 8,000 20,000 4,200 29.600 2.00.000 147. 1.35.000 20,000 2.00.000 (10) Provision for Taxation: 3 90,000 Profit - 10% of Sales Less: Debenture interest 10.200 79.800 39.900 Provision @ 50% 90.000 (11) Profit and Loss A/c: Profit - 10% of Sales Less: Debenture interest Provision for tax 10% dividend on equity shares 8% Dividend on preference shares Tax on distributed profit @15% Net profit to Balance Sheet 10.200 39.900 20.000 8,000 4.200 82.300 7.700 Note: (1) Stock turnover ratio has been calculated with reference to cost of goods sold. (11) Debenture interest has been assumed to be paid. (INT) Tax on distributed profit has been assumed to be paid @ 15% on dividend paid. From the following information, prepare the projected trading and Profit & Loss Account for the next financial year ending 31st March, 2014 and the projected balance sheet as on that date: Gross profit ratio 25% Net profit to equity capital 10% Stock turnover ratio 5 times Average debt collection period 2 months Creditors velocity 3 months Current ratio 2 Proprietary ratio (Fixed assets to capital employed) 80% Capital gearing ratio (Preference shares and debentures to total long-term funds) 30% General reserve and profit and loss to equity shareholders' fund 20% Preference share capital to debentures 2 Cost of sales consists of 40% for materials and balance for wages and overheads. Gross profit is 56,00,000