Q18. (Net Income & Basic Cash Flow Statement with Cash Dividend & Stock Dividend): The following are the comparative Balance Sheets of Pak Arab Ltd. Debit Balances Cash 31-12-2018 31-12-2019 Accounts Receivable Net 57,500 220,500 Merchandise Inventory 62,500 434,000 Plant Net) 99,000 322,000 92,500 682,500 Land 20,000 682,500 Goodwill 10,000 178,500 Total ,341,500 2,520,000 Credit Balances 31-12-2018 31-12-2019 Accounts Payable 315,000 253,750 Accrued Expenses 252,000 334,250 Bonds Payable 420,000 210,000 Ordinary Share Capital 840,000 1,050,000 Share Premium 210,000 262,500 Retained Earnings 304,500 409,500 Total 2,341,500 2,520,000 At the end of 2019, declared and paid Cash Dividend Rs. 157,500 and Stock Dividend Rs. 262,500. REQUIRED: 2. Cash Flow Statement. 1. Computation of Net Income. Q13. Comparative balance sheets at the end of 2014 and 2015 of Pearl Limited appear below: Pearl Limited (Comparative Balance Sheet) ASSETS 2014 2015 Cash and Bank Balance 37,500 33,750 Marketable Securities 30,000 18,750 Accounts Receivable 240,000 247,500 Merchandise Inventory 180,000 176,250 Plant and Equipment (Net) 450,000 480,000 Total 937,500 956,250 Liabilities & shareholder's Equity Accounts Payable 112,500 150,000 Accrued Expenses 45,000 33,750 Long Term Loan 52,500 Debenture Payable (due 2020) 375,000 232,500 Ordinary Share Capital 120,000 120,000 Retained Earning 285,000 367,500 Total 937,500 956,250 Additional Information: 1. Operating Income for 2014 was Rs. 140,400 and No Dividend was declared. 2. Operating Income for 2015 is Rs187,500 and Cash dividends Rs.105,000 were declared and paid. 3. Net Income for 2014 was Rs58,125. REQUIRED: Compute the following ratios for the year 2014 and 2015. Interpretation against each ratio is required. i. Current Ratio ii. Debt Ratio iii. Equity Capital iv. Stock Turnover v. Receivable Turnover vi. Return on Capital Employed vii. Return on Assets NOTE: Sales were Rs. 600,000 and Rs. 637,500 for the year 2014 and 2015 respectively and Profit on Sales is 25%