Looking Good Capital Reserve In Balance Sheet

Accounting questions and answers.

Capital reserve in balance sheet. Assets and liabilitiesCompanies can have many types of assets and liabilities including cash stocks investments debts property and more. As at 30062010 is given below Rs. Capital Reserve can be understood as the sum earmarked for specific purposes or long term projects.

It is made out of capital profits earned due to the sale of fixed assets at a price greater than its. Capital and reserves is the share capital plus the accumulated profits and losses of the company. The Capital Redemption appearing in the Balance Sheet pertains to redemption of redeemable preference shares in the past.

Assuming that the companys decision is given effects journalise the transactions in the books of the company and prepare its Balance Sheet immediately after redemption. Balance sheets cover all elements of a companys finances and are broken down into two main sections. 9000 equity shares of Rs.

This is exclusive of the basic share capital portion You might be tempted to skip the reserves area without thinking much of it. A capital reserve is created upon revaluation of an asset such that it reflects the current market value. A capital reserve is an account on the balance sheet to prepare the company for any unforeseen events like inflation instability need to expand the business or to get into a new and urgent project.

It is derived from the accumulated capital surplus of a. Generally you debit retained earnings and credit the reserve fund also an equity account. To Own Debentures Ac 582000 To Capital reserve Ac Profit on cancellation of debentures 18000 Being profit on cancellation of 6000 Debentures transferred to capital reserve account Question 3.

In 000s P Q Liabilities P Q 5000 300 200 2400 140 200 1000 1. N20 Therefore Capital reserve is Rs 23250 Pre incorporation profits Less. The summarized Balance Sheet of Spices Ltd.