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Financial Accounting I – unit V
BBA | BBA-BI | BBA-TT | BCIS 1st
PU 2012 Spring Q. No. 3a
The following adjustments have made on December 31, 2011 for the Fishtail Trading, Pokhara.
Accounts | Amount Rs. |
Account receivables Common stock Advertising expenses Prepaid rent Interest income Income tax provision (expenses) Cash Salaries expenses Land and building Accrued expenses and liabilities Goodwill Rent expenses Sales revenue Bank loan (due Dec. 31, 2015) Loss from sales of plants Cost of goods sold Account payable Opening retained earnings | 51,000 90,000 18,000 72,000 42,000 7,000 9,000 13,000 39,000 22,000 46,000 49,000 2,54,000 74,000 54,000 1,50,000 13,000 13,000 |
Required:
i. Multiple step income statement ending 31 December, 2011. [5]
ii. Classified balance sheet ending 31 December, 2011. [5]
Solution:
i. Fistail Trading
Income statement (multi-step)
For the year ended 31 Dec. 2011
Particulars | Amount Rs. |
Sales revenue Less: Cost of goods sold | 2,54,000 1,50,000 |
Gross profit Less: Operating expenses (A) General & administrative expenses Salaries expenses Rent expenses (B) Selling & distribution expenses Advertising expenses Total operating expenses (A + B) | 1,04,000 13,000 49,000 18,000 80,000 |
Operating income Less: Non-operating income Interest income Less: Non-operating expenses Loss on sale of plants | 24,000 42,000 54,000 |
Net income before tax Less: Tax expenses | 12,000 7,000 |
Net income after tax | Rs. 5,000 |
Statement of Retained earnings
Particulars | Amount Rs. |
Opening balance of retained earnings Add: Net income for the year | 13,000 5,000 |
Earnings available Less: Dividend paid | 18,000 – |
Ending balance of retained earnings | Rs. 18,000 |
ii. Fistail Trading
Balance sheet
As on Dec. 31, 2011
Assets | Amount Rs. |
Current assets Cash Account receivables Prepaid rent | 9,000 51,000 72,000 |
Investments | |
Property, plant, and equipment Land and building | 39,000 |
Intangible assets Goodwill | 46,000 |
Total assets | Rs. 2,17,000 |
Liabilities and stockholder’s equity | |
Current liabilities: Account payable Accrued expenses and liabilities | 13,000 22,000 |
Long-term debt Bank loan | 74,000 |
Stockholder’s equity Common stock Ending balance of retained earnings | 90,000 18,000 |
Total liabilities and | Rs. 2,17,000 |