Following Balance Sheet of M/S Combined Industriesrelates to the year ended Dece
ID: 2705513 • 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
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