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Thien has a retail business. The following balances were
extracted from his books at the endof his financial year on 31
March 2012.
$Leasehold property 25 years (cost) 50 000Equipment (cost) 54
000Provisions for depreciation:Leasehold property 10 000Equipment
17 0006% Bank loan repayable 31 December 2015 25 000Bank 5 150
DrTrade receivables 6 750Trade payables 4 010Provision for doubtful
debts 700Revenue 78 580Purchases 18 240Purchase returns 1
600Inventory at 1 April 2011 4 690Equipment repairs 850Equipment
running expenses 2 650General expenses 8 400Wages 15 300Insurance 3
640Power and water 2 300
Advertising 5 100Discount allowed 1 650Discount received
330Capital at 1 April 2011 50 000Drawings 8 500
Additional information at 31 March 20121 Inventory was valued at
$3870.
2 Thien took stock valued at $450 for his own use.3 Equipment
running expenses, $750, were accrued and insurance, $1350, was
prepaid.4 The 6% bank loan was received on 1 December 2011.5 An
appropriate amount is to be written off the lease.6 The purchase of
additional equipment, $10 000, had been omitted from the
books.Payment was $5000 by cheque with the remainder on credit.7
Equipment is to be depreciated at the rate of 20% per annum using
the diminishing(reducing) balance method.8 Provision for doubtful
debts is to be maintained at 8% of trade receivables.REQUIRED(a)
Prepare the income statement for the year ended 31 March 2012. [20
marks](b) Prepare the balance sheet at 31 March 2012.
Q.2Kashif traders imported a machine from Germany at least price
Rs 250 thousand paid. Importand excise duty ofRs 75,000, the sales
tax paid was 25000, loading charges to bring the machine to
factory
location Rs 10,000. While
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unloading a part was damage due to over employees error and was
replaced at a cost of50,000 , installation charges 20,000 , useful
life of machine is estimated as ten years and asalvage of
10,000.Required: compute cost of machine. Also determine
depreciation charge for first 3 years andbook value.
Q.3Kashif traders use periodic system of inventory valuation. On
1 st January, the beginning ofaccounting your, it has 200 unit s,
at rupees 25 per unit. During the year the following purchasewere
made
January 700 unit 27 per unitFebruary 200 unit 29 per unit
April 400 Unit 30 per unitJuly 100 Unit 35 per unitNovember 200
Unit 29per unitDecember 100 Unit 29.5 per unit
During the year 1200 unit were sole.Required: - determine the
value of ending inventory
