Following Balance Sheet of M/S Combined Industriesrelates to the year ended
December 31 2000.
Liabilities and equipment
Plant and equipment
1. Possibility of bad debts on Accounts Receivablehas not been considered yet. It is
estimated that baddebts will Rs. 20000.
2. Rs. 150000 representing cost of large scalenewspaper. Advertising campaign to
be completed in year2000 has been included in the inventories. It is alsofound
that inventoriesinclude merchandise Rs. 65000 received on December 312000
has not been recordedas purchases.
3. Un-expired insurance consists of Rs. 4000. Thecost of fire insurance for the year
2000 is Rs. 31000includes the cash surrender value of officer lifeinsurance
4. Books show that plant & equipment has a costof Rs. 2000000 with
depreciation of Rs. 850000 recognized in prior years.However the balances
include fullydepreciated equipment of Rs. 150000 that has been scraped andis
no longer inhand.
5. Accrued expenses ofRs. 25000 represent accrued salaries of Rs. 35000 lessnon
current advances ofRs. 10000 made to company officials.
6. Loan payablerepresents a loan from bank that is payable in regularquarterly
installments of Rs.20000. Interest of Rs. 2000 accrued on the loan onDecember
31 2000 has beenrecorded in the books.
Assignment NO-2 Financial Accounting II(MGT-401)
Fall Semester 2009
7. Tax liability notshown is estimated at Rs. 45000.
8. Capital stock hadbeen issued for a total consideration of Rs. 1850000the
amount received is inexcess of par and stated values of the stock beingreported
as surplus. Capitalstock represents 100000 shares of Rs. 10 each.
By consideringIAS (1) Presentation of Financial Statements you are requiredto
preparecorrected Balance Sheet with accounts properlyclassified.