Question Details: Following Balance Sheet of M/S Combined Industriesrelates to t
ID: 2433295 • Letter: Q
Question
Question Details:
Following Balance Sheet of M/S Combined Industriesrelates to the year ended
December 31, 2000.
Asset
Rs.
Liabilities & Equity
Rs.
Cash
Account Recieveable
Inventory
Unexpired Insurance
Plant & Equipment
20,000
650,000
800,000
40,000
1,150,000
Accrued Expenses
Loan Payable
Account Payable
Capital Stock
Surplus
25,000
200,000
650,000
1,00,000
965,000
Total
2,840,000
Total
2,840,000
Additional information:
1. Possibility of bad debts on Accounts Receivable has not beenconsidered yet. It is
estimated that bad debts will Rs. 20,000.
2. Rs. 150,000 representing cost of large scale newspaper.Advertising campaign to
be completed in year 2000 has been included in the inventories.It is also found
that inventories include merchandise Rs. 65,000 received onDecember 31, 2000
has not been recorded as purchases.
3. Un-expired insurance consists of Rs. 4,000. The cost of fireinsurance for the year
2000 is Rs. 31,000 includes the cash surrender value of officerlife insurance
policy.
4. Books show that plant & equipment has a cost of Rs.2,000,000 with
depreciation of Rs. 850,000 recognized in prioryears. However, the balances
include fully depreciated equipment of Rs. 150,000 that has beenscraped and is
no longer in hand.
5. Accrued expenses of Rs. 25,000 represent accrued salaries ofRs. 35,000 less non
current advances of Rs. 10,000 made to company officials.
6. Loan payable represents a loan from bank that is payable inregular quarterly
installments of Rs. 20,000. Interest of Rs. 2,000 accrued on theloan on December
31, 2000 has been recorded in the books.
7. Tax liability not shown is estimated at Rs. 45,000.
8. Capital stock had been issued for a total consideration ofRs. 1,850,000 the
amount received is in excess of par and stated values of thestock being reported
as surplus. Capital stock represents 100,000 shares of Rs. 10each.
Required:
By considering IAS (1) Presentation of FinancialStatements, you are required to prepare corrected Balance Sheetwith accounts properly classified.
Asset
Rs.
Liabilities & Equity
Rs.
Cash
Account Recieveable
Inventory
Unexpired Insurance
Plant & Equipment
20,000
650,000
800,000
40,000
1,150,000
Accrued Expenses
Loan Payable
Account Payable
Capital Stock
Surplus
25,000
200,000
650,000
1,00,000
965,000
Total
2,840,000
Total
2,840,000
Explanation / Answer
x.
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