Question: Mr.Ali is running \"Hyper Star Traders\" a sole proprietorship busines

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Question:

Mr.Ali is running "Hyper Star Traders" a sole proprietorship businesslocated at the Mall Road, Lahore. At the year end the businesshas:

Furniture Rs. 40,000

Plant 200,000

Capital 280,000

On30th November 2009 Mr. Ali submitted a tender for sale ofgoods of Rs. 20,000 which is likely to be confirmed shortly. Bankdebited service charges Rs. 150 and interest on loan Rs. 500 andcredited dividend for Rs. 2,000 in the month of December(intimation from bank was received on 7th January 2010). Mr. Alialso estimates that 5% of the amount will not be collectable fromsundry debtors. House rent allowance Rs. 5,000 has been paid on31st December from his personal account, on the same date stock wasvalued at Rs. 200,000 and plant Rs. 160,000 because of its wear andtear.

The following balances (inthe books of Hyper Star Traders) are also given along with aboveinformation as on 31st December 2009:

Particulars Rs.Particulars Rs.

Opening stock 120,000 Bankbalance 36,000

Sundry Debtors 100,000 Billspayable 20,000

Long term Investments 60,000Returns outwards 4,800

Returns inwards 8,000 Commission2,000

Purchases 680,000 Sales924,000

Cash in hand 4,000 Interestreceived 800

Bills receivable 44,000 SundryCreditors 160,000

Carriage out 3,600 Salaries48,000

Insurance paid 2,800 Wages45,200

Explanation / Answer

IncomeStatement Sales 924,000 Less: Return Inward -8,000 916,000 InterestReceived 800 Dividend 2,000 Commission Earned 2,000 Closing Stock 200,000 1,120,800 Opening Stock 120,000 Purchases 680,000 Less: Return Outward -4,800 675,200 Wages 45,200 Salaries 48,000 Insurance 2,800 Carriage Outward 3,600 Bank Service Charges 150 Interest On Loan 500 House rent Allowance 5,000 Bad Debts 5,000 Depreciation 40,000 945,450 Excess Of Income OverExpenditure 175,350 Balance Sheet Assets Cash 4,000 Bank (36000+2000-150-500) 37,350 S.Debtors 100000 Less Bad Debts -5000 95,000 Closing Stock 200,000 Bills Receivables 44,000 Plant 200000 Less: Depreciation -40000 160,000 Furniture 40,000 Long Term Investment 60,000 640,350 Liabilities Capital (280000 + 5000 HRA) 285,000 Excess Of Income…. 175,350 S.Creditors 160,000 Bills Payable 20,000 640,350

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