FollowingBalance Sheet of M/S Combined Industries relates to the yearended Asset
ID: 2662174 • Letter: F
Question
FollowingBalance Sheet of M/S Combined Industries relates to the yearended
Assets
Rs.
Liabilities & Equity
Rs.
Cash
200000
Accrued Expenses
25000
Accounts Receivable
650000
Loan Payable
200000
Inventory
800000
Accounts Payable
650000
Un-expired Insurance
40000
Capital Stock
1000000
Plant & equipment
1150000
Surplus
965000
2840000
2840000
Additional information:
1. Possibilityof bad debts on Accounts Receivable has not been considered yet. Itis
estimated that baddebts will Rs. 20,000.
2. Rs. 150,000representing cost of large scale newspaper. Advertising campaignto
be completed in year2000 has been included in the inventories. It is alsofound
that inventoriesinclude merchandise Rs. 65,000 received on December 31,2000
has not been recordedas purchases.
3. Un-expiredinsurance consists of Rs. 4,000. The cost of fire insurance for theyear
2000 is Rs. 31,000includes the cash surrender value of officer lifeinsurance
policy.
4. Books showthat plant & equipment has a cost of Rs. 2,000,000with
depreciation of Rs. 850,000 recognized in prior years.However, the balances
include fullydepreciated equipment of Rs. 150,000 that has been scraped andis
no longer inhand.
5. Accrued expenses ofRs. 25,000 represent accrued salaries of Rs. 35,000 lessnon
current advances ofRs. 10,000 made to company officials.
6. Loan payablerepresents a loan from bank that is payable in regularquarterly
installments of Rs.20,000. Interest of Rs. 2,000 accrued on the loan on December 31,2000 has been recorded in the books.
7. Tax liability notshown is estimated at Rs. 45,000.
8. Capital stock hadbeen issued for a total consideration of Rs. 1,850,000 the amountreceived is in excess of par and stated values of the stock beingreported as surplus. Capital stock represents 100,000 shares of Rs.10 each.
Required:
By consideringIAS (1) Presentation of Financial Statements, you are requiredto
prepare corrected BalanceSheet with accounts properly classified.
Assets
Rs.
Liabilities & Equity
Rs.
Cash
200000
Accrued Expenses
25000
Accounts Receivable
650000
Loan Payable
200000
Inventory
800000
Accounts Payable
650000
Un-expired Insurance
40000
Capital Stock
1000000
Plant & equipment
1150000
Surplus
965000
2840000
2840000
Explanation / Answer
Balance Sheet of M/S Combined Industriesrelates to the year ended 31 Dec'00 Assets Liabilities Cash in chkingacct 200,000 Accrued Exp : Salary 35,000 Acct Rx 650,000 Tax Payable 45,000 Less : BadDebt -20,000 630,000 Inventory 800,000 Loan Payable 200,000 Less : Advtgcost -150,000 650,000 Int on Loan 2,000 Un-expiredIns 40,000 Acct payable 650,000 Less: Adj forcorrect amt -5,000 Add: Addl Purc 65,000 715,000 Less : Fire Insfor Yr'00 -31,000 4,000 Capital Stock 965,000 Adv to Coofficials 10,000 Surplus 1,000,000 Less: Prov for Bad Debt -20,000 Assets Less : Adj for Purc -65,000 Eqpt 2,000,000 Less: Adj for Advtg -150,000 Less: Depn -850,000 Less: Adj for Ins -36,000 Less : Eqptscraped -150,000 1,000,000 Less : Eqpt Scraped -150,000 Less: Int on Loan -2,000 Less: Tax payable -45,000 532,000 2,494,000 2,494,000