Question

Sachin, Saurav and Rahul are civil engineers. They incorporated a real estate company called SSR Realty Ltd. in the year 2017, to engage in purchase and sale of properties (i.e., land, buildings, flats, apartments, etc.). Extracts related to the Balance Sheet of their company is given as follows, but is not arranged as per Schedule III, Part I of Companies Act, 2013:

Particulars	₹	Particulars	₹
Authorised Share Capital	10,00,000	Advance Tax	20,000
Prepaid Insurance	1,40,000	9% Debentures	2,30,000
Securities Premium	1,15,000	Provision for Employees Retirement Benefits	1,60,000
Building (Held for Sale)	11,60,000	Bank	1,00,000
Subscribed Share Capital	7,20,000	GST Payable	90.000
Advance from Customers	1,35,000	Investment in Mutual Funds	??
Provident Fund Payable	1,20,000	(Investment made for 6 months)
Revaluation Reserve	1,15,000	Office Building	2,60,000
Issued Share Capital	7,50,000

Based on the above information, answer the following questions:

1. Balance to be shown in Balance Sheet as Shareholders’ Funds is ______.
   1. ₹ 7,20,000
   2. ₹ 2,30,000
   3. ₹ 9,50,000
   4. ₹ 4,90,000
2. Balance of Non-current Liabilities is ______.
   1. ₹ 2,30,000.
   2. ₹ 3,90,000
   3. ₹ 5,20,000
   4. ₹ 1,60,000
3. Non-current Assets in the Balance Sheet will be ______.
   1. ₹ 2,60,000
   2. ₹ 14,20,000
   3. ₹ 11,60,000
   4. ₹ 16,60,000
4. Investment in Mutual Funds is ______.
   1. ₹ 5,000
   2. ₹ 25,000
   3. ₹ 1,25,000
   4. ₹ 65,000

Answer 1

1. Balance to be shown in Balance Sheet as Shareholders’ Funds is ₹ 9,50,000.
2. Balance of Non-current Liabilities is ₹ 3,90,000.
3. Non-current Assets in the Balance Sheet will be ₹ 2,60,000.
4. Investment in Mutual Funds is ₹ 5,000.

Explanation:

1. Shareholders’ Funds = 7, 20,000 + 1, 15,000 + 1, 15,000
   = ₹ 9,50, 000
2. It includes only long-term debts: 9% Debentures (₹ 2,30,000) + Provision for Employee Retirement Benefits (₹ 1,60,000) = ₹ 3,90,000.
3. Since this is a real estate company, the Building Held for Sale is their stock/inventory (Current Asset). Only the Office Building (₹ 2,60,000) is a long-term fixed asset.
4. The balancing figure method where Total Liabilities (₹ 16,85,000) minus Total Known Assets (₹ 16,80,000) equals ₹ 5,000.