Possibility of bad debts on accounts receivable has not

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Reference no: EM13481532

Following Balance Sheet of M/S Combined Industries relates to the year ended December 31, 2000.

Asset

Liabilities and equipment

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 Receivable has not been considered 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 on December 31, 2000 has not been recorded as purchases.

3. Un-expired insurance consists of Rs. 4,000. The cost of fire insurance for the year 2000 is Rs. 31,000 includes the cash surrender value of officer life insurance policy.

4. Books show that plant & equipment has a cost of Rs. 2,000,000 with depreciation of Rs. 850,000 recognized in prior years. However, the balances include fully depreciated equipment of Rs. 150,000 that has been scraped and is no longer in hand.

5. Accrued expenses of Rs. 25,000 represent accrued salaries of Rs. 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 in regular quarterly installments of Rs. 20,000. Interest of Rs. 2,000 accrued on the loan on December 31, 2000 has been recorded in those.

Financial Accounting

7. Tax liability not shown is estimated at Rs. 45,000.

8. Capital stock had been issued for a total consideration of Rs. 1,850,000 the amount received is in excess of par and stated values of the stock being reported as surplus. Capital stock represents 100,000 shares of Rs. 10 each.

Required:

By considering IAS (1) Presentation of Financial Statements, you are required to prepare corrected Balance Sheet with accounts properly classified.

Reference no: EM13481532

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