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ABSOR Pvt. Ltd.

Read Case and Accounting Standard #26


Prepare:
a. Transaction Analysis for pre-operating period, 1 Apr 2015 to 30 Sep 2015
b. Income Statement for pre-operating period, 1 Apr 2015 to 30 Sep 2015
c. Balance Sheet as on 30 Sep 2015
d. Transaction Analysis for operating period, 1 Oct 2015 to 31 Mar 2016
e. Income Statement for operating period, 1 Oct 2015 to 31 Mar 2016
f. Balance Sheet as on 31 Mar 2016

Period – I: Pre-Operating Period: 1 Apr 2015 to 30 Sep 2015


a) Transaction Analysis
Transactions Cash Assets Liabilities O.E Ret.Ear.
Issue of shares 1250,000 250,000 -- 1500,000 --
Incorporation cost (20,000) 20,000 -- -- --
Land purchased (200,000) 200,000 -- -- --
Building constructed (150,000) 150,000 -- -- --
Raw materials purchased (150,000) 150,000 -- -- --
Machinery purchased (200,000) 200,000 -- -- --
Furniture & Fittings purchased (140,000) 140,000 -- -- --
Total 390,000 1110,000 -- 1500,000 --

b) Balance Sheet as on 30 September 2015


Owners’ Equity and Liabilities Amt (Rs.)
Owners’ Equity (150,000 Shares of Rs.10 each) 1500,000
Total 1500,000
Assets
Non-Current Assets
Land 200,000
Buildings 150,000
Furniture and Fittings 140,000
Machinery 200,000
Patent 250,000
Preliminary Expenses 20,000
Current Assets
Materials 150,000
Cash 390,000
Total 1500,000

c) Income Statement for the six months period ending on 30 September, 2015
Particulars Amt (Rs.)
Revenues 0
Less: Expenses 0
Income / Loss 0

Period – II: Operating Period: 1 Oct 2015 to 31 Mar 2016


a) Transaction Analysis
Transactions Cash Assets Liabilities O.E Ret.Ear.
Balances b/f 390,000 1110,000 -- 1500,000 --
Sales 1200,000 809,000 -- -- 2009,000
Bad debts -- (9,000) -- -- (9,000)
Provision for bad debts -- (24,000) -- -- (24,000)
Materials purchased (230,000) 350,000 120,000 -- --
Advertisements (45,000) -- -- -- (45,000)
Labor and manufacturing expenses (700,000) -- -- -- (700,000)
Salaries (160,000) -- 40,000 -- (200,000)
Additional Machinery purchased (300,000) 300,000 -- --
Production overheads (30,500) -- -- -- (30,500)
Insurance premium (17,000) 8,500 -- -- (8,500)
Short Term Loan 100,000 -- 100,000 -- --
ST Loan Repaid (100,000) -- (100,000) -- --
Interest on ST Loan -- -- 1,500 -- (1,500)
Corporate Taxes (98,950) -- -- -- (98,950)
Depreciation on Machinery -- (25,000) -- -- (25,000)
Depreciation on Buildings -- (3,750) -- -- (3,750)
Depreciation on Furniture & Fittings -- (7,000) -- -- (7,000)
Patents amortized -- (50,000) -- -- (50,000)
Materials consumed -- (390,000) -- -- (390,000)
Preliminary Incorporation Expenses -- (20,000) -- -- (20,000)
Total 8,550 2048,750 161,500 1500,000 395,800

b) Income Statement for the six months period ending on 31 March, 2016
Particulars Amt (Rs.)
Sales Revenues 2009,000
Less: COGS
Materials consumed (150,000 + 350,000 – 110,000) 390,000
Manufacturing labor and other direct expenses 700,000
Depreciation on machinery 25,000
Production overheads 30,500 1145,000
Gross Margin 863,500
Less: Operating Expenses
Salaries 160,000
Add: Outstanding salary 40,000 200,000
Bad debts 9,000
Provision for doubtful debts 24,000
Advertisement and promotional expenses 45,000
Insurance premium 17,000
Less: Prepaid premium 8,500 8,500
Depreciation on Buildings 3,750
Depreciation on Furniture & Fittings 7,000
Amortization of Patents 50,000
Preliminary expenses written off 20,000 367,250
Operating Profit / EBIT 496,250
Interest on Loan 1,500
Profit before Tax (EBT) 494,750
Tax 98,950
Net Profit / Net Income (PAT) 395,800
c) Balance Sheet as on 31 March 2016
Owners’ Equity and Liabilities Amt (Rs.)
Owners’ Equity (150,000 Shares of Rs.10 each) 1500,000
Retained Earnings 395,800 1895,800
Current Liabilities
Accounts Payables 120,000
Outstanding Salaries 40,000
Outstanding Interest 1,500 161,500
Total 2057,300
Assets
Non-Current Assets
Land 200,000
Buildings 150,000
Less: Depreciation (3,750) 146,250
Furniture and Fittings 140,000
Less: Depreciation (7,000) 133,000
Machinery 500,000
Less: Depreciation (25,000) 475,000
Patent 250,000
Less: Amortization (50,000) 200,000
Current Assets
Accounts Receivable 809,000
Less: Bad Debts (9,000)
800,000
Less: Provision for Doubtful debts (24,000) 776,000
Materials 150,000
Prepaid insurance premium 8,500
Cash 8,550
Total 2057,300