Financial Accounting I – Unit V
BBA | BBA-BI | BBA-TT | BCIS 1st
PU 2015 Fall Q. No. 12
The trial balance of World Trade Centre Ltd. is as follow
World Trade Centre Ltd.
Trial Balance
As on 31st Dec, 2014 (in Rs.)
| Particulars | Dr. Amount | Cr. Amount |
| Cash and cash equivalent Receivables Inventories Prepaid expenses Property, plant, and equipment at cost Accumulated depreciation on PPE Trademark and goodwill Notes receivables long-term Notes payable long-term Account payable Accrued payroll Advance on sales (Deferred revenues) Other current liabilities 8% Debenture Preferred stock Common stock Retained earnings (Jan-1) Additional paid-in capital – CS Net sales Cost of goods sold Selling expenses Gain on sale of machine Administrative expenses Dividend-interim | 5,000 2,000 3,000 1,500 30,000 20,000 5,000 15,000 1,500 1,000 4,000 | 3,000 13,500 5,000 3,000 6,000 5,000 10,500 5,000 10,000 6,000 1,000 20,000 1,000 |
| Total | 89,000 | 89,000 |
Required:
a. Multi-step income statement for the year ended 2014.
b. Statement of Retained Earnings for the year ended 2014.
c. Classified balance sheet. [10]
Solution:
a.
World Trade Centre Ltd.
Income statement (multi-step)
For the year ended December 31, 2014
| Particulars | Amount Rs. |
| Net sales Less: Cost of goods sold | 20,000 15,000 |
| Gross profit Less: Operating expenses A. General & administrative expenses Administrative expenses B. Selling and distribution expenses Selling expenses Total operating expenses (A + B) | 5,000 1,000 1,500 3,500 |
| Operating income Add: Non-operating incomes Gain on sale of machine Less: Non-operating | 1,500 1,000 – |
| Net income before tax Less: Income tax | 2,500 – |
| Net income after tax | 2,500 |
b.
World Trade Centre Ltd.
Statement of retained earnings
31 December, 2014
| Particulars | Amount Rs. |
| Beginning balance of retained earnings Add: Net income | 6,000 2,500 |
| Earnings available Less: Dividend paid | 8,500 4,000 |
| Ending balance of retained earnings | Rs. 4,500 |
c.
World Trade Centre Ltd.
Balance sheet (classified)
As on Dec. 31, 2014
| Assets | Amount Rs. |
| Current assets Cash and cash equivalent Receivables Inventories Prepaid expenses | 5,000 2,000 3,000 1,500 |
| Investments | |
| Property, plant, and equipment Property, plant, and equipment at cost Less: Accumulated depreciation on PPE Notes receivable | 30,000 3000 5,000 |
| Intangible assets Trade marks and goodwill | 20,000 |
| Total assets | Rs. 63,500 |
| Liabilities and stockholder’s equity | |
| Current liabilities: Account payable Accrued payroll Advance on sales Other current liabilities | 5,000 3,000 6,000 5,000 |
| Long-term debt Notes payable 8% Debenture | 13,500 10,500 |
| Stockholder’s equity Common stock Preferred stock Additional paid in capital – common stock Ending balance of retained earnings | 10,000 5,000 1,000 4,500 |
| Total liabilities and stockholder’s equity | Rs. 63,500 |