Financial Accounting 1 Lecture – 40 Question Following trial balance has been extracted from the books of Alpha Ltd. as on June 30, You are required to prepare the profit and loss account for the year and the Balance Sheet as at June 30, 2002.

Financial Accounting 2 Lecture – 40 Alpha Limited Trial Balance as at June 30, 2002 Title of AccountDr. Rs.Cr. Rs. Paid up capital175, % Debentures75,000 Building at Cost237,500 Equipment at Cost20,000 Vehicles at Cost43,000 Accumulated Dep. – Building11,250 Equipment6,000 Vehicles12,900

Financial Accounting 3 Lecture – 40 Title of AccountDr. Rs.Cr. Rs. Stock Opening Balance56,725 Sales245,500 Purchases134,775 Carriage Inward4,050 Salaries and Wages23,100 Directors Remuneration15,750 Vehicle Running Expenses20,300 Insurance7,325 Miscellaneous Expenses1,400

Financial Accounting 4 Lecture – 40 Title of AccountDr. Rs.Cr. Rs. Markup on Debentures3,750 Debtors46,525 Creditors28,425 Bank20,975 General Reserve12,500 Share Premium Account35,000 Interim Dividend Paid8,750 Accumulated Profit and Loss account42,350 TOTAL643,925

Financial Accounting 5 Lecture – 40 Additional Information: Closing stock Rs. 68,050. Depreciation Building 5,000, Vehicles Rs 7,500, Equipment 3,000. Six months Debenture markup is to be accrued. 10% final dividend is to be paid in addition to interim dividend. Transfer Rs. 5,000 to general reserve. Authorised share capital is Rs. 250,000 divided in to 25,000 shares of Rs. 10 each. Provision for Income Tax to be made Rs. 12,500.

Financial Accounting 6 Lecture – 40 Solution Alpha Ltd. Balance Sheet As At June 30, 2002 ParticularsNoteAmount Rs. Fixed Assets at WDV1 Current Assets 254,850 Debtors Stock in Trade Bank Balance 46,525 68,050 20,975 Current Liabilities 135,550 Creditors Proposed Dividend Debenture Markup Payable Provision for Tax 28,425 17,500 3,750 12,500 62,175 Working Capital73,375 Net Assets Employed328,225 Double underline

Financial Accounting 7 Lecture – 40 Financed By: Authorized Capital 25,000 Shares of Rs. 10 each250,000 Paid Up Capital 17,500 shares of Rs. 10 each Share Premium General Reserve Accumulated Profit and Loss Account 175,000 35,000 17,500 25,725 Share Holders’ Equity Debentures 253,225 75,000 Total328,225 Double underline Note: Slide 6 and 7 will be shown together and then zoomed one by one as done in earlier lectures.

Financial Accounting 8 Lecture – 40 Alpha Ltd Profit and Loss Account for the Year Ended June NoteRS. Sales245,500 Less: Cost of Goods Sold2127,500 Gross Profit118,000 Less: Administrative Expenses Directors Remuneration15,750 Salaries and Wages23,100 Vehicle Running Expenses20,300 Insurance7,325 Depreciation115,500 Miscellaneous Expenses1,400 83,375 Operating Profit34,625

Financial Accounting 9 Lecture – 40 Less: Debenture Markup7,500 Net Profit Before Tax27,125 Less: Provision for Tax12,500 Net Profit after tax14,625 Accumulated Profit Brought Forward42,350 56,975 Less: Appropriation General Reserve5,000 Interim dividend8,750 Proposed Final Dividend17,500 31,250 Accumulated Profit Carried Forward25,725 Note: Slide 8 and 9 will be shown together and then zoomed one by one as done in earlier lectures. Double underline

Financial Accounting 10 Lecture – 40 Note 1 – Fixed Assets at WDV ParticularsCost RATERATE Acc. Dep.WDV As At Addition/ Deletion As At As At For The Year As At As At Building237, ,2505,00016,250221,250 Equipment20,0000 6,0003,0009,00011,000 Vehicles43, ,9007,50020,40022,600 TOTAL300, ,15015,50045,650254,850 Note: to be Zoomed in two parts as done in lecture 38 Double underline

Financial Accounting 11 Lecture – 40 Note 2 Cost of Goods Sold Opening Stock56,725 Add: Purchases134,775 Add: Carriage Inward4,050 Cost of Material Purchased138,825 Cost of Goods Available for Sale195,550 Less: closing stock(68,050) 127,500 Double underline

Financial Accounting 12 Lecture – 40 Statement Of Changes in Equity Alpha Ltd Statement of Changes in Equity for Year Ended June 30, 2002 Share Capital Share Premium Account General Reserve Profit & Loss A/c Total Balance On Jun 30, ,00035,00012,50042,350264,850 Net Profit for the Period14,625 Transfer to General Reserve5,000(5,000)0 Dividend(26,250) Balance On June 30, ,00035,00017,50025,725253,225 Double underline

Financial Accounting 13 Lecture – 40 Notes to the Accounts Company and Its operations Company was formed in the year The company, trades in electronic consumer items.

Financial Accounting 14 Lecture – 40 Significant Accounting Policies Historical Cost Convention These accounts have been prepared under the historical cost convention. Revenue Recognition Sales are recorded on dispatch of goods to customers. Fixed Assets Fixed Assets are recorded at cost less accumulated depreciation. Stock Valuation Method of stock valuation is Taxation Provision for Taxation is calculated on the basis of