Ans 1 Amby Enterprises

Ans. Assets Liabilities and Owners’ Equity

Cash 1 Owners’ Equity 26
Inventory 10 Bank loan 10
Accounts receivable 20 Accounts payable 9
Prepaid expenses 16 Accrued wages 2
Total Assets 47 Total Liabilities 47
and Owners’
Equity

Ans 2 ALPHA COMPANY

1.FIFO Method
COGS: Rs 31,800
Ending Inventory: Rs 15,600
2.Weighted Average Cost Method
COGS: Rs 33,180
Ending Inventory: Rs 14,220

Ans 3 SHAKTI BROS

Impact of bad debt related transactions on Income Statement:

Bad debt expense will appear as Rs 27,750
Impact of bad debt related transactions on Balance Sheet:
Accounts receivables 1,15,000
Less: Provision for doubtful debts 5,750 Rs 1,09,250

Ans 4 RAJESH AND SONS

Depreciation: Rs 10,981
Profit on sale of machine: Rs 889
Insurance Premium (expense): Rs 1,500
The above 3 items will reduce Profit and Retained Earnings by Rs 11,591
Total Assets will also reduce by Rs 11,591: PPE, Net will reduce by Rs 5,591, Prepaid Insurance will be
higher by Rs 4,500, while cash will be reduce by Rs 10,500
Ans 5 ORIENTAL COMPANY

Net cashflow from Operating Activities = Rs 1,028,000

Net cashflow from Investing Activities = Rs (2,514,000)
Net cashflow from Financing Activities = Rs 820,000
Net increase in Cash and Cash Equivalents = Rs (666,000)

Ans 6 O HARA BEAUTY SALON

Account Totals Sales 540.000

Advertising & promotion 15,000
Salaries 95,000
Utilities 5,000
Materials consumed 16,800
Interest 500
Depreciation 750
Bad debt expense 6,350
Rent 10,000
Expenses written off 5,000
Loss on disposal of computer 9,500
Furniture & fixture 20,000; 19,900 (Net)
Accumulated depreciation on 100
Furniture & fixture
Tools & Equipment 30,000; 29,850 (Net)
Accumulated depreciation on 150
Tools & Equip
Cash 415,000
Refundable deposit 100,000
Inventory 4,200
Accounts Receivable 67,000; 63650 (Net)
Provision for bad debts 3,350
Capital 176,000
Retained earnings 366,100
Bank loan 50,000
Accounts payable 10,000
Customer advances 30,000
Interest payable 500