QUESTION
The following information is extracted from the books of a business concern on 30th June 2021.
Particulars | Rs. | Particulars | Rs. |
Opening stock | 15,000 | Net sales | 65,000 |
Plant and Machinery | 100,000 | Bank charges | 5,453 |
Accumulated depreciation - Plant and Machinery | 20,000 | Loan given to ABC Brothers. | 40,000 |
Cash in hand | 12,800 | Capital | 250,000 |
Cost of goods sold | 25,000 | Loan taken from bank | 50,000 |
Creditors | 54,000 | Commission received | 10,000 |
Sundry debtors | 20,000 | Return inwards | 5,000 |
Bad debts | 1,575 | Carriage outwards | 450 |
ADDITIONAL INFORMATION:
· In addition to the value of Plant & Machinery given in the above information, one machine costing Rs. 30,000 were bought on 1st April 2021. The basis/Policy of charging depreciation is Time Proportionate (on the basis of use). Plant & Machinery is depreciated @ 10% per annum on straight-line method.
· Provision for doubtful debts is to be maintained @ 5%
· Net loss for the period is Rs. 75,000.
· There is no closing stock found at the end of the accounting period
· Books of accounts are closed on 30th June each year.
Required:
Based on the above information, you are required to calculate the amount of:
1. Gross profit
2. Purchases
3. Net book value of Plant & Machinery.
4.
Sundry debtors to be presented in Balance Sheet.
5. Owners’ equity to be presented in the Balance Sheet.
Note:
1. Preparation of Income Statement and Balance Sheet or any ledger account is not required. Just solve the given questions with the necessary work.
2. Any mistake in any part will be awarded zero marks in that part. So be careful while solving the assignment.
Mentioning of Add or Plus sign (+) and Less or Minus sign (-) are necessary with working in case of addition or subtraction. Otherwise, marks of working will not be awarded
Task 1: Gross profit
Gross Profit = Net Sales – Low Cost of Goods Sold
= 65,000 – 25,000
Gross Profit = 40,000
Task 2: Purchases:
Purchases = cost of goods sold – Less Opening Stock
= 25,000 – 15, 000
Purchases = 10,000
Task 3: Net book Value of Plant & Machinery:
Cost of assets = 100,000 Less acc dep = 20,000
= 80,000
Less depreciation (100,000*10%) = 10,000
Book value of asset = 90,000
New Machine = 30,000
Less Depreciation (30,000*10%*3/12) = 750
Book Value = 29250
Task 4: Sundry debtors to be presented in Balance Sheet
Debtor = 20,000
New provision (20000*5%) = 1000
Debtor = 19000
Task 5: Owners’ equity to be presented in Balance Sheet.
Capital = 250,000
Add net loss = 75,000
Equity = 175,000
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