SEMESTER Fall 2023

ADVANCED FINANCIAL ACCOUNTING (FIN611)

ASSIGNMENT NO. 01

DUE DATE: November 14, 2023

MARKS:15

Question:
ZEE is running a business of ballpoints manufacturing as a sole proprietorship. He introduced
Rs. 1,000,000 as capital in cash at the beginning of the year 2022. On the same date, he also
purchased a plant. During the year, he borrowed Rs. 400,000 and Rs. 600,000 from his brother
and a relative respectively for business use. He has produced the following financials during the
year 2022:

Total number of units sold at Rs. 9 each 125,000

Cash payments for: Rs.
Salaries paid during the year 210,000
Raw material paid 420,000
Insurance Paid 40,000
Other expenses Paid 50,000

Assume no opening inventory for raw material or finished goods on 1st January 2022.
Additional information:
a. A batch of 5000 ball points sold during the year has not yet paid till the year end.
b. Unpaid creditors of Rs. 80,000 for material purchased during the year.
c. The unused stock of raw material was Rs. 30,000 at the year-end.
d. Insurance expenses had been paid for 15 months in cash at the beginning of 2022.
e. Other expenses include personal expenses of Rs. 2,000 and charity of Rs. 6,000 to a
charitable government hospital.
f. The plant the cost of Rs. 1,000,000 having a life of 10 years and an anticipated residual
value of Rs. 150,000.
g. The salaries include Rs. 10,000 for installing the plant purchased in beginning of 2022.
 h. Half of the loan from the brother was repaid during the year.
i. Carriage inward was payable Rs. 8,000.
j. A new equipment costing Rs. 400,000 was purchased to improve the quality of ballpen in
December 2022.
Requirements:
a) Describe impact of the new equipment purchased in December 2022 on financial
performance of the business.
b) Determine the impact of charity on financial statements of the business with respect to the
firm’s profitability. What are the ethical considerations for a business when making such
donations?
c) Prepare profit and loss account for the year ended 31st December 2022 and the Balance
Sheet as on that date using conversion method.

Note: Show complete working as well.

IMPORTANT:

24 hours extra / grace period after the due date is usually available to

overcome uploading difficulties. This extra time should only be used to meet

the emergencies and above mentioned due dates should always be treated as

final to avoid any inconvenience.

IMPORTANT INSTRUCTIONS:

 Complete calculations are required for every part of the problem.

 All the students are recommended to attempt the assignment their

own.

OTHER IMPORTANT INSTRUCTIONS:

DEADLINE:
  Make sure to upload the solution file before the due date on VULMS.
 Any submission made via email after the due date will not be

accepted.

FORMATTING GUIDELINES:

 Use the font style “Times New Roman” or “Arial” and font size “12”.

 It is advised to compose your document in MS-Word format.

 You may also compose your assignment in Open Office format.

 Use black and blue font colors only.

Note related to load shedding: Please be proactive

Dear students!

As you know that Pre Mid-Term semester activities have started and load

shedding problem is also prevailing in our country. Keeping in view the fact,

you all are advised to post your activities as early as possible without waiting

for the due date. For your convenience; activity schedule has already been

uploaded on VULMS for the current semester, therefore no excuse will be

entertained after due date of assignments, quizzes or GDBs.

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