Financial Accounting I – unit V
BBA | BBA-BI | BBA-TT | BCIS 1st
PU 2013 Fall Q. No. 3a
Following items are taken from the records of Himal Trading Concern’s 31st Dec. 2012.
| Accounts | Amounts |
| Building Furniture Accumulated depreciation building Accumulated depreciation furniture Cash Notes payable due after two years Retained earnings (Jan. 1st, 2012) Depreciation expenses building Depreciation expenses furniture Interest expenses General expenses Delivery van Inventories Accumulated depreciation delivery van Account reciavable Account payable Capital stock Sales revenue Depreciation expenses – delivery van Cost of goods sold Salaries (60% is only administrative) Dividend | 2,50,000 5,000 50,000 2,000 52,500 1,00,000 50,000 12,500 1,000 10,000 50,000 25,000 3,00,000 10,000 1,00,000 50,000 1,00,000 15,00,000 5,000 9,50,000 1,00,000 1,000 |
Required:
i. Multi-step income statement for the year ended December 31st, 2012.
ii. A classified balance sheet as on December 31st, 2012.
Solution:
i. Himal Trading Concern
Income statement (multi-step)
For the year ended Dec. 31st, 2012
| Particulars | Amount Rs. |
| Sales revenue Less: Cost of goods sold | 15,00,000 9,50,000 |
| Gross profit Less: Operating expenses (A) General & Operating expenses Depreciation expenses building Depreciation expenses furniture General expenses Salaries (60% of 1,00,000) (B) Selling & distribution expenses Salaries (40% of 1,00,000) Depreciation expenses – delivery van Total operating expenses (A + B) | 5,50,000 12,500 1,000 50,000 60,000 40,000 5,000 1,68,500 |
| Operating income Add: Non-operating incomes Less: Non-operating expenses Interest expenses | 3,81,500 10,000 |
| Net income before tax Less: Tax expenses | 3,71,500 – |
| Net income after tax | Rs. 3,71,500 |
Statement of Retained Earnings
| Particulars | Amount Rs. |
| Beginning balance of retained earnings Add: Net income for the year | 50,000 3,71,500 |
| Earnings available Less: Dividend paid | 4,21,500 1,000 |
| Ending balance of retained earnings | Rs. 4,20,500 |
ii. Himal Trading Concern
Balance sheet (classified)
As on Dec. 31, 2012
| Assets | Amount Rs. |
| Current assets: Cash Account receivable Inventories | 52,500 1,00,000 3,00,000 |
| Investments | |
| Property, plant, and equipment Building (2,50,000 – 50,000) Furniture (5,000 – 2,000) Delivery van (25,000 – 10,000) | 2,00,000 3,000 15,000 |
| Intangible assets | |
| Total assets | Rs. 6,70,500 |
| Liabilities and stockholder’s equity | |
| Current liabilities: Account payable | 50,000 |
| Long-term debt Notes payable | 1,00,000 |
| Stockholder’s equity Capital stock Ending balance of retained earnings | 1,00,000 4,20,500 |
| Total liabilities and stockholder’s equity | Rs. 6,70,500 |