Chapter # 09

Preparation of Financial Statements

 Question # 03: Debit Credit
Following is Abdullah Limited’s Trial Balance as on 30.06.22 Trial Balance as on 30.06.22
(Rs. in “000”) (Rs. in “000”)
Additional information:
• Closing Stock of Inventory amounted to Rs. 30,000 Capital (01.07.21) 300
• On 01.01.22, Abdullah decided to bring one of his cars into Equipment (01.07.21) 100 20
the business costing Rs. 100,000 for which no entry has Purchase and Revenue 120 530
been recorded yet. Returns 20 10
• Depreciation method for Vehicles is Straight line method Discounts 10 5
@10% of cost Current Bank account 250
• Heat & light expense includes Rs. 40,000 relating to Cost of Inventory (01.07.21) 50
equipment which was expensed out ignorantly.
Trade Receivables and Payables 190 100
• Advances in Trial include 40% payment made for Purchase
Bank Deposit account 600
of Equipment on 01.11.21, not recorded Yet.
• Depreciation rate for all Equipment is 15% under Reducing Loan @15% (01.07.21) 400
balance method. Interest received on deposit 75
• Rent includes payment of annual rent of Rs. 20,000 Wages 60
expiring on 30 March 22 for Owner’s residence. Moreover, Carriage outward 80
Incurred Rent is Rs. 150,000. Allowance for doubtful debt 30
• 40% of Long-term Loan repaid on 01.01.22 through Heat and Light 90
cheque. Interest expense paid Rs. 18,000 in cheque Rent expense 120
• Bad debt recovered during the Year amounted to Rs. 5,000
Drawings 40
which was received in Cheque, not recorded Yet
• It is decided that Bad debt expense of Rs. 20,000 needs to Bad debt expense 20
be written off and that allowance would be increased by Advances 50 30
Rs. 10,000. Short-term Loan 300
Required: Income Statement and Balance sheet 1,800 1,800