Financial Accounting Lecture – 39

Solution
Beta (Private) Limited
Balance Sheet As At June 30, 2002
Particulars Note Amount Rs.
Fixed Assets at WDV 1 492,330
Current Assets
Debtors 42,525
Stock in Trade 48,630
Bank Balance 14,994
106,149
Current Liabilities
Creditors 27,360
Proposed Dividend 15,000 Double
underline
42,360
Working Capital 63,789
Net Assets Employed 556,119
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Financial Accounting Lecture – 39
Solution
Double
Financed By: underline

Authorized Capital
50,000 Shares of Rs. 10 each 500,000
Paid Up Capital
30,000 Shares of Rs. 10 each 300,000
General Reserve 8,000
Accumulated Profit and Loss Account 2 8,119
Double
Share Holders Equity 316,119 underline

Debentures 240,000
Total 556,119

Note: Slide 1 and 2 will be shown together and then zoomed one
by one as done in earlier lectures.

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 Financial Accounting Lecture – 39
Note 1 – Fixed Assets at WDV
Cost Rate Accumulated Depreciation WDV
Particulars As At Addition/ As At As At For The As At As At
1-7-01 Deletion 30-6-02 1-7-01 Year 30-6-02 30-6-02
Land 120,000 0 120,000 0 0 0 0 120,000
Building 315,000 0 315,000 10 46,050 26,895 72,945 242,055
Furniture &
Fixtures 34,500 0 34,500 10 11,250 2,325 13,575 20,925
Vehicles 187,500 0 187,500 10 66,000 12,150 78,150 109,350
TOTAL 657,000 0 657,000 123,300 41,370 164,670 492,330

Double
underline
Note: to be Zoomed in two parts as done
in lecture 38

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 Financial Accounting Lecture – 39

Calculation of Depreciation
Building 315,000 – 46,050 = 268,950 x 10% = 26,895
Furniture 34,500 – 11,250 = 23,250 x 10% = 2,325
Vehicles 750,000 – 0 = 750,000 x 10% = 75,000

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 Financial Accounting Lecture – 39
Note 2 – Accumulated Profit and Loss Acocount

Balance As Per Trial Balance 49,489

Less: Depreciation for the Year (note 1) (41,370)
8,119

Double
underline

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Financial Accounting Lecture – 39
Fixed Assets Schedule with Addition / Deletion

Addition during the year

Furniture
and Fixture – Cost Rs. 15,000
Vehicles – Cost Rs. 750,000

Deletion / Disposal
Vehicle – Cost Rs. 187,500
Sale Proceeds – Rs. 150,000

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 Financial Accounting Lecture – 39

Cost Accumulated Depreciation WDV

R
A
Particulars As At Addition/ As At As At On For The As At As At
T
1-7-01 Deletion 30-6-02 1-7-01 Disposal Year 30-6-02 30-6-02
E

Land 120,000 0 120,000 0 0 0 0 120,000

Building 315,000 0 315,000 10 46,050 26,895 72,945 242,055
Furniture
and Fixture 34,500 15,000 49,500 10 11,250 3,825 15,075 34,425
Vehicles 187,500 750,000 750,000 66,000 (66,000) 75,000 75,000 675,000
(187,500) 10
TOTAL 657,000 577,500 1,234,500 123,300 (66000) 105720 163,020 1,071,480

Note: to be Zoomed in two parts as done Double

underline
in lecture 38

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 Financial Accounting Lecture – 39

Calculation of Depreciation
Building 315,000 – 46,050 = 268,950 x 10% = 26,895
Furniture 34,500 – 11,250 = 23,250 x 10% = 2,325
+ 15,000 x 10% = 1,500
OR
49,500 – 11,250 = 38,250 x 10% = 3,825

Vehicles 750,000 – 0 = 750,000 x 10% = 75,000

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Financial Accounting Lecture – 39
Disposal of Fixed Asset Account

Assets Disposal Account

Debit side. Credit side.

Cost 187,500 Acc.Dep. 66,000
Profit and Sale
Loss A/c 28,500 Proceeds 150,000

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Financial Accounting Lecture – 39
Question
• The following trial balance has been extracted from the
books of Delta Limited as on June 30, 2002.
• You are required to prepare the profit and loss account for
the year and the Balance Sheet as at June 30, 2002.

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Financial Accounting Lecture – 39

Delta Limited
Trial Balance as at June 30, 2002
Title of Account Dr. Rs. Cr. Rs.
Paid up capital 1,100,000
Accumulated Profit and Loss Account 308,520
Land 200,000
Building 585,000
Machinery 495,000
Vehicles 115,000
Accumulated Dep. – Building 85,000
Machinery 142,200
Vehicles 30,000
Purchases 1,815,282

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Financial Accounting Lecture – 39

Title of Account Dr. Rs. Cr. Rs.

Sales 2,851,290
Office Maintenance 289,512
Salaries 487,863
Rent 38,700
Electricity 13,941
Bad Debts Written off 6,732
Provision for Doubtful Debts 1-7-01 7,749
Debtors 196,056
Creditors 157,437
Stock 1-7-01 231,201
Cash and Bank Balance 207,909
TOTAL 4,682,196 4,682,196
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Financial Accounting Lecture – 39

• Following adjustments are required to be made:

 Authorized share capital is Rs. 1,100,000 divided in to
11,000 shares of Rs. 100 each.
 Stock in Trade on 30-6-2002 Rs. 262,278
 Salaries payable amount to Rs. 5,229
 Rent paid in advance amount to Rs. 2,700
 Dividend of Rs. 132,000 is proposed
 Provision for doubtful debts is to be increased to Rs.
8,442
 Depreciation Building 5%, Machinery 10% and Vehicles
20% on Written Down Value

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Financial Accounting Lecture – 39
Solution
Delta Limited
Balance Sheet As At June 30, 2002
Particulars Note Amount Rs.
Fixed Assets at WDV 1 1,060,520
Current Assets
Debtors 2 187,614
Prepaid Rent 2,700
Stock in Trade 262,278
Cash and Bank Balance 207,909
660,501
Current Liabilities
Creditors 157,437
Salaries Payable 5,229
Proposed Dividend 132,000 Double
underline
294,666
Working Capital 365,835
Net Assets Employed 14 1,426,355
Financial Accounting Lecture – 39

Double
underline
Financed By:
Authorized Capital
11,000 Shares of Rs. 100 each 1,100,000
Paid Up Capital Double
11,000 Shares of Rs. 100 each 1,100,000 underline

Accumulated Profit and Loss Account 326,355

Total 1,426,355

Note: Slide 14 and 15 will be shown together and then zoomed one
by one as done in earlier lectures.

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Financial Accounting Lecture – 39

Delta Ltd
Profit and Loss Account for the Year Ended June 30 2002
Note RS.
Sales 2,851,290
Less: Cost of Goods Sold 3 1,784,205
Gross Profit 1,067,085

Less: Expenses
Salaries and Wages4 493,092
Office Maintenance 289,512
Rent 5 36,000
Electricity 13,941
Bad Debts 6,732
Provision for bad debts 6 693
Depreciation 1 77,280
917,250
Net Profit 149,835
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 Financial Accounting Lecture – 39

Less: Dividend Declared 132,000

Double
17,835 underline

Add: Accumulated Profit Brought Forward 308,520

Accumulated Profit Carried Forward 326,355

Note: Slide 16 and 17 will be shown together and then zoomed one
by one as done in earlier lectures.

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 Financial Accounting Lecture – 39
(1) Fixed Assets at WDV

Cost Acc. Dep. WDV

R
A
Particulars As At Addition/ As At As At For The As At As At
T
1-7-01 Deletion 30-6-02 1-7-01 Year 30-6-02 30-6-02
E

Land 200,000 0 200,000 0 0 0 0 200,000

Building 585,000 0 585,000 5 85,000 25,000 110,000 475,000
Machinery 495,000 0 495,000 10 142,200 35,280 177,480 317,520
Vehicles 115,000 0 115,000 20 30,000 17,000 47,000 68,000
TOTAL 1,395,000 0 1,395,000 257,200 77,280 334,480 1,060,520

Note: to be Zoomed in two parts as done

Double
in lecture 38 underline

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Financial Accounting Lecture – 39

• (2) Debtors
Debtors 196,056
Double
Less: Provision for underline

Doubtful Debts(note 6) (8,442)

187,614

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Financial Accounting Lecture – 39

(3) Cost of Goods Sold

Double
Opening Stock 231,201 underline

Add: Purchases 1,815,282

Cost of Goods Available for Sale 2,046,483
Less: closing stock (262,278)
1,784,205

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Financial Accounting Lecture – 39

• (4) Salaries
Salaries and Wages

Debit side. Credit side.

Paid 487,863
Payable 5,229 Balance 493,092

• (5) Rent Rent

Debit side. Credit side.

Paid 38,700 Prepaid 2,700

Balance 36,000
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Financial Accounting Lecture – 39

• (6) Provision for Doubtful Debts

Provision

Debit side. Credit side.

Bal. B/F 7,749
Balance 8,442 P&L A/c 693

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