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Financial Accounting I – unit V
BBA | BBA-BI | BBA-TT | BCIS 1st
PU 2016 Fall Q. No. 13
Presented below the Trial Balance of Adhikari and Brothers Inc. as of December 31, 2015.
| Accounts | Debit | Credit |
| Equipment Accumulated depreciation – Equipment Building Accumulated depreciation – Building Land Office supplies Purchase of Shares of Mega Bank Ltd. Cash Goodwill Prepaid rent Account receivable Account payable Unearned revenue Salaries payable Bonds payable Interest payable Share capital Retained earnings (2014) Rent expenses-sales office Salaries saleswomen Sales commission Sales revenue Salaries expenses – Administrative Supplies expenses Rent expenses – Administrative Depreciation expenses Tax expenses Dividend | 1,12,500 2,00,000 2,50,000 48,070 85,000 13,230 40,000 1,500 23,450 17,350 23,000 10,250 33,375 5,525 2,700 39,300 31,200 12,690 | 22,500 40,000 18,225 10,000 10,400 1,60,000 1,500 1,50,000 3,31,485 2,05,000 |
| Total | 9,49,140 | 9,49,140 |
Required:
a. A multi-step income statement of Adhikari and Brothers for the period ended December 31, 2015.
b. A classified balance sheet of Adhikari and Brothers as of December 31, 2015. [10]
Solution:
a.
Adhikari and Brothers Inc.
Income statement (multi-step)
For the year ended Dec. 31, 2015
| Particulars | Amount Rs. |
| Sales revenue Less: Cost of goods sold | 2,05,000 – |
| Gross profit Less: Operating expenses A. General & administrative expenses Salaries expenses – administrative Supplies expenses Rent expenses – administrative Depreciation expenses B. Selling & distribution expenses Rent expenses – sales office Salaries slaes women Sales commission Total Operating expenses (A + B) | 2,05,000 33,375 5,525 2,700 39,300 17,350 23,000 10,250 1,31,500 |
| Operating income Add: Non-operating incomes Less: Non-operating expenses | 73,500 – – |
| Income before tax Less: Tax expenses | 73,500 31,200 |
| Net income after tax | Rs. 42,300 |
Statement of Retained Earnings
| Particulars | Amount Rs. |
| Beginning balance of retained earnings Add: Net income | 3,31,485 42,300 |
| Earnings available Less: Dividend paid | 3,73,785 12,690 |
| Ending balance of retained earnings | Rs. 3,61,095 |
b.
Adhikari and Brothers Inc.
Balance sheet
As on Dec. 31, 2015
| Assets | Amount Rs. |
| Current assets: Cash Prepaid rent Account receivable Office supplies | 13,230 1,500 23,450 48,070 |
| Investments Purchase of shares of Mega Bank Ltd. | 85,000 |
| Property plant, and equipment Land Building (2,00,000 – 40,000) Equipment (1,12,500 – 22,500) | 2,50,000 1,60,000 90,000 |
| Intangibles assets Goodwill | 40,000 |
| Total assets | Rs. 7,11,250 |
| Liabilities and stockholder’s equity | |
| Current liabilities: Account payable Unearned revenue Salaries payable Interest payable | 18,255 10,000 10,400 1,500 |
| Long-term debt Bonds payable | 1,60,000 |
| Stockholder’s equity Share capital Ending balance of retained earnings | 1,50,000 3,61,095 |
| Total liabilities and stockhlder’s equity | Rs. 7,11,250 |