Following Balance Sheet of M/S Combined Industriesrelates to the year ended Dece
ID: 2696401 • Letter: F
Question
Following Balance Sheet of M/S Combined Industriesrelates to the year ended
December 31, 2000.
Asset
Rs
Liabilities and equipment
Rs
Cash
Account Recievable
Inventory
Unexpired insurance
Plant and equipment
200,000
650,000
800,000
40,000
1,150,000
2,840,000
Accured expense
Loan payable
Account payable
Capital stock
surplus
25,000
200,000
650,000
1,000,000
965,000
2,840,000
Additional information:
1. Possibility of bad debts on Accounts Receivablehas not been considered yet. It is
estimated that baddebts will Rs. 20,000.
2. Rs. 150,000 representing cost of large scalenewspaper. Advertising campaign to
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-expired insurance consists of Rs. 4,000. Thecost of fire insurance for the year
2000 is Rs. 31,000includes the cash surrender value of officer lifeinsurance
policy.
4. Books show that plant & equipment has a costof Rs. 2,000,000 with
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 onDecember
31, 2000 has beenrecorded in the books.
Assignment NO-2 Financial Accounting II(MGT-401)
Fall Semester 2009
7. Tax liability notshown is estimated at Rs. 45,000.
8. Capital stock hadbeen issued for a total consideration of Rs. 1,850,000the
amount received is inexcess of par and stated values of the stock beingreported
as surplus. Capitalstock represents 100,000 shares of Rs. 10 each.
Required:
By consideringIAS (1) Presentation of Financial Statements, you are requiredto
preparecorrected Balance Sheet with accounts properlyclassified.
Asset
Rs
Liabilities and equipment
Rs
Cash
Account Recievable
Inventory
Unexpired insurance
Plant and equipment
200,000
650,000
800,000
40,000
1,150,000
2,840,000
Accured expense
Loan payable
Account payable
Capital stock
surplus
25,000
200,000
650,000
1,000,000
965,000
2,840,000
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