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Financial Accounting 1 – unit V
BBA | BBA-BI | BBA-TT | BCIS 1st
PU 2010 Spring Q. No. 3
Following items are taken from the records of Himal Trading Concerns in 31st December 2010.
| Accounts | Amount Rs. |
| Building Equipment Furniture Merchandise inventories Accumulated depreciation – building .Accumulated depreciation – equipment Accumulated depreciation – furniture Debtors Cash Creditors Notes payable due after two years Capital stock Retained earnings Sales revenue Depreciation expenses – building .Depreciation expenses – equipment .Depreciation expenses – furniture Cost of goods sold Interest expenses Salaries-sales personnel Administrative expenses | 2,50,000 25,000 5,000 3,00,000 50,000 10,000 2,000 1,00,000 52,500 50,000 1,00,000 1,00,000 50,000 15,00,000 12,500 5,000 1,000 9,50,000 10,000 1,00,000 50,000 |
Required:
a. Multi-step income statement for the year ended December 31, 2010. [7]
b. Classified balance sheet as on December 31, 2010. [8]
Solution to this question:
a. Himal Trading Concern
Income statement (classified)
For the year ended Dec. 31, 2010
| Particulars | Amount Rs. |
| Sales revenue Less: Cost of goods sold | 15,00,000 9,50,000 |
| Gross profit Less: Operating expenses General and administrative expenses Administrative expenses .Depreciation expenses – building Depreciation expenses – equipment .Depreciation expenses – furniture Total general and administrative expenses (A) Selling and distribution expenses Salaries-sales personnel Total selling and distribution expenses (B) Total operating expenses (A + B) | 5,50,000 50,000 12,500 5,000 1,000 68,500 1,00,000 1,00,000 1,68,500 |
| Operating income | 3,81,500 |
| Add: Non-operating incomes and gains Less: Non-operating expenses Interest expenses | – 10,000 |
| Income before tax Less: Income tax | 3,71,500 – |
| Net income | Rs. 3,71,500 |
b. Balance sheet
Himal Trading Concern
As on Dec. 31, 2010
| Assets | Amount Rs. |
| Current assets: Cash Debtors Merchandise inventories Total current assets | 52,500 1,00,000 3,00,000 4,52,500 |
| Investments | – |
| Property, Plant, and Equipments Building (2,50,000 – 50,000) Equipment (25,000 – 10,000) Furniture (5,000 – 2,000) Total property, plant, and equipments | 2,00,000 15,000 3,000 2,18,000 |
| Intangibles | – |
| Total assets | Rs. 6,70,500 |
| Liabilities and stockholder’s equity | |
| Current liabilities: Creditors | 50,000 |
| Long-term debt Notes payable | 1,00,000 |
| Stock holder’s equity Capital stock Retained earnings (3,71,500 + 50,000) Total stockholder’s equity | 1,00,000 4,21,500 5,21,500 |
| Total liabilities and stockholder’s equity | Rs. 6,71,500 |
Note: Due to unavailability of