Answer

(a)
Hassan, Naeem and Faraz
Statement of Profit or Loss
For the year ended 30-6-2017

Notes Rs. ‘000’

Sales 303,360
Less: Sales return (9,000 + 1,200) (10,200)
293,160
Cost of Sales N-1 (210,750)
Gross profit 82,410
Other Income N-2 612
Admin and selling expenses N-3 (57,258)
Net Profit 25,764

(b) Hassan, Naeem and Faraz

Appropriation Account for the year ended 30 June 2017

Total Hassan Naeem Faraz

Interest on capital 3,672 1,224 1,836 612

Interest on drawings (540) (162) (378)
Salaries 2,100 800 1,300
Profit share 20,532 6,844 10,266 3,422
25,764 8,868 11,940 4,956

(c) Current accounts

Hassan Naeem Faraz Hassan Naeem Faraz
Rs. Rs. Rs. Rs. Rs. Rs.

Balance 5,100 7,650 2,550

b/d
Drawings 4,050 9,450

Balance 13,968 15,540 700 Share 8,868 11,940 4,956

c/d of profit
Balance 1,944
c/d
(d)
Hassan, Naeem and Faraz
Statement of Financial Position
As on 30-6-2017

Rs. ‘000’ Rs. ‘000’

Assets:
Non-Current Assets:
Fixed Assets – Cost 103,200
Accumulated Depreciation (39,696) 63,504

Current Assets:
Trade receivables [12,500 – 1,200 – 3,000] 33,300
Less Allowance for bad debts (1,665) 31,635

Stock (workings) 27,930

Prepayments and other receivables 7,050
Receivable against sale of machine 1,245
Cash and bank 3,900
Total Assets 135,264
Equity and Liabilities:
Capital
H 20,400
N 30,600
F 10,200 61,200
Current Accounts
H 13,968
N 15,540 27,564
F (1,944) 88,764
Current Liabilities:
Trade payables 30,600
Accruals and other payables [15,930 – 255 – 105 + 330] 15,900
135,264

Notes:
N:1 Cost of sales
Opening Stock 24,600
Add Purchase 210,000
Add Carriage Inwards 4,080
Less Closing Stock [27,000 + 930] (27,930)
Total 210,750

N-2: Other Income

Machine rent income 255
Gain on disposal 27
Miscellaneous Income 330
612
 N:3 Selling & Admin expenses
Wages and salaries 17,700
Discount Allowed (4,800 + 150) 4,950
Utility Charges 7,050
Running Charges (9,870 + 330) 10,200
Finance Charges (1,740 + 30) 1,770
Depreciation 16,173
Bad debts reversed (585)
Total 57,258
Workings:
(i) Sales Return 1,200
Debtors 1,200
Stock – Given = 27,000
Add: Damaged Stock [At lower of cost & NRV] 930
1,200
Cost = × 100 = 960
120
NRV = 1,200 – 270 = 930
27,930

(ii) Suspense A/c 2,820

Bank charges 30
Discount allowed (bal.) 150
Debtors [2,820 ÷ 95%] 3,000

Recorded Required
Bank 2,820 Bank 2,820
Suspense 2,820 Bank charges 30
Discount allowed (bal.) 150
Debtor 3,000

(iii) Allowance A/c

Bad debts 585 b/d 2,250

c/d 1,665

[37,500 – 1,200 – 3,000] × 5% = 1,665

Allowance 585
Bad debts 585
(iv) Running Expense 330
Running Expenses payable 330
360,000
(v) × 8.5 = 255,000 [from 1-10 to 15-6]
12

Accruals and payables 255,000

Rent Income 255,000
Remaining Advance rent is 360,000 – 255,000 = 105,000
 Fixed Assets

Unadjusted balance 105,000 Disposal (1,620 ÷ 90%) 1,800

c/d 103,200

Accumulated Depreciation

Disposal (180 + 297) 477 b/d 24,000

Depreciation (W) 16,173
c/d 39,696

Depreciation for the year:

105,000 – 24,000 = 81,000

Less: WDV of disposal (1,800 – 180) 1,620
79,380
× 20% 15,876
Add on disposal [1,620 × 20% × 11/12] 297 16,173

Depreciation 16,173
Accumulated depreciation 16,173
Entry of Disposal:

Receivable (11350 – 105) 1,245,000

Accrual and other payable 105,000
Accumulated depreciation (180 + 297) 477,000
Fixed Assets 1,800,000
Gain (balance) 27,000