Following Balance Sheet of M/S Combined Industriesrelates to the year ended

Following Balance Sheet of M/S Combined Industriesrelates to the year ended

December 31 2000.

Asset

Rs

Liabilities and equipment

Rs

Cash

Account Recievable

Inventory

Unexpired insurance

Plant and equipment

200000

650000

800000

40000

1150000

2840000

Accured expense

Loan payable

Account payable

Capital stock

surplus

25000

200000

650000

1000000

965000

2840000

Additional information:

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

policy.

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.

Required:

By consideringIAS (1) Presentation of Financial Statements you are requiredto

preparecorrected Balance Sheet with accounts properlyclassified.