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CA Intermediate · Advanced Accounting · Financial Statements of Companies

Kaveri Textiles Ltd. has 4,00,000 equity shares of Rs 10 each, fully paid. Securities premium stands at Rs 6,00,000 and the general reserve at Rs 3,00,000. The Statement of Profit and Loss shows a closing balance of Rs 2,50,000. Under Schedule III (Division I), what will be the figure shown under the main heading 'Reserves and Surplus' on the face of the balance sheet?

The figure is Rs 11,50,000. Reserves and Surplus under Schedule III includes securities premium, general reserve and the balance in the Statement of Profit and Loss, so 6,00,000 plus 3,00,000 plus 2,50,000 gives the total. Share capital is shown separately.

  1. ARs 11,50,000Correct
  2. BRs 9,00,000
  3. CRs 8,50,000
  4. DRs 51,50,000

Explanation

Reserves and Surplus includes securities premium, general reserve and the surplus balance in the Statement of Profit and Loss: 6,00,000 + 3,00,000 + 2,50,000 = Rs 11,50,000. Rs 9,00,000 wrongly leaves out the surplus. Rs 51,50,000 wrongly adds share capital of Rs 40,00,000, which is shown under Shareholders' Funds separately.

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