AccountancyNEB 2080
The trial Balance of a company as on year end is as follows : Particulars Dr. (Rs.) Cr. (Rs.) : : : Sales 4,00,000 Share capital 2,50,000 Debenture 50,000 Creditors 18,000 Other income 15,000…
8The trial Balance of a company as on year end is as follows :
| Particulars | Dr. (Rs.) | Cr. (Rs.) |
|---|---|---|
| Sales | - | 4,00,000 |
| Share capital | - | 2,50,000 |
| Debenture | - | 50,000 |
| Creditors | - | 18,000 |
| Other income | - | 15,000 |
| Opening stock | 20,000 | - |
| Purchase | 1,50,000 | - |
| Wages | 25,000 | - |
| Salary | 50,000 | - |
| Office expenses | 15,000 | - |
| Prepaid insurance | 25,000 | - |
| Advertisement expense | 12,000 | - |
| Interest expense | 5,000 | - |
| Machinery | 250,000 | - |
| Debtors | 11,000 | - |
| Electricity & water exp. | 30,000 | - |
| Investment | 40,000 | - |
| Cash | 100,000 | - |
| Total | 7,33,000 | 7,33,000 |
Additional information: i) Prepaid insurance was expired: Rs. 15,000 ii) Closing inventory: Rs. 30,000 iii) Depreciation on machinery: 15% iv) Provision for income tax: 10% Required: a) Income statement as per NFRS b) Balance sheet as per NFRS OR a) Multi step income statement b) Verticle balance sheet
Answer
Solution to NEB 2080 (Class 12) Accountancy (8 Marks)
a) Income Statement (Multi-Step Format) as per NFRS
Step 1: Calculate Cost of Goods Sold (COGS)
- Opening Stock: 20,000
- Add: Purchases: 1,50,000
- Less: Closing Stock: (30,000)
- COGS = 20,000 + 1,50,000 – 30,000 = 1,40,000
Step 2: Calculate Gross Profit
- Sales: 4,00,000
- Less: COGS: (1,40,000)
- Gross Profit = 4,00,000 – 1,40,000 = 2,60,000
Step 3: Calculate Total Expenses
- Wages: 25,000
- Salary: 50,000
- Office Expenses: 15,000
- Insurance Expense (Prepaid expired): 15,000
- Advertisement Expense: 12,000
- Interest Expense: 5,000
- Electricity & Water Expense: 30,000
- Depreciation Expense (15% of 250,000): 37,500
- Total Expenses = 25,000 + 50,000 + 15,000 + 15,000 + 12,000 + 5,000 + 30,000 + 37,500 = 1,89,500
Step 4: Calculate Net Profit Before Tax
- Gross Profit: 2,60,000
- Less: Total Expenses: (1,89,500)
- Net Profit Before Tax = 2,60,000 – 1,89,500 = 70,500
Step 5: Calculate Income Tax (10% of Net Profit Before Tax)
- Income Tax = 10% of 70,500 = 7,050
Step 6: Calculate Net Profit After Tax
- Net Profit Before Tax: 70,500
- Less: Income Tax: (7,050)
- Net Profit After Tax = 70,500 – 7,050 = 63,450
Step 7: Add Other Income
- Other Income: 15,000
- Total Net Profit = 63,450 + 15,000 = 78,450
Income Statement (Multi-Step Format)
| Particulars | Amount (Rs.) |
|---|---|
| Sales | 4,00,000 |
| Less: Cost of Goods Sold | |
| - Opening Stock | 20,000 |
| - Purchases | 1,50,000 |
| - Less: Closing Stock | (30,000) |
| - COGS | 1,40,000 |
| Gross Profit | 2,60,000 |
| Less: Expenses | |
| - Wages | 25,000 |
| - Salary | 50,000 |
| - Office Expenses | 15,000 |
| - Insurance Expense | 15,000 |
| - Advertisement Expense | 12,000 |
| - Interest Expense | 5,000 |
| - Electricity & Water Expense | 30,000 |
| - Depreciation Expense | 37,500 |
| - Total Expenses | 1,89,500 |
| Net Profit Before Tax | 70,500 |
| Less: Income Tax (10%) | 7,050 |
| Net Profit After Tax | 63,450 |
| Add: Other Income | 15,000 |
| Net Profit for the Year | 78,450 |
b) Vertical Balance Sheet as per NFRS
Step 1: Calculate Total Assets
- Current Assets:
- Cash: 1,00,000
- Debtors: 11,000
- Closing Stock: 30,000
- Prepaid Insurance (15,000 – 15,000 expired): 0
- Total Current Assets = 1,00,000 + 11,000 + 30,000 = 1,41,000
Non-Current Assets:
- Machinery (250,000 – 37,500 depreciation): 2,12,500
- Investment: 40,000
- Total Non-Current Assets = 2,12,500 + 40,000 = 2,52,500
Total Assets = 1,41,000 + 2,52,500 = 3,93,500
Step 2: Calculate Total Liabilities & Equity
Current Liabilities:
- Creditors: 18,000
- Income Tax Payable: 7,050
- Total Current Liabilities = 18,000 + 7,050 = 25,050
Non-Current Liabilities:
- Debentures: 50,000
- Total Non-Current Liabilities = 50,000
Equity:
- Share Capital: 2,50,000
- Retained Earnings (Net Profit): 78,450
- Total Equity = 2,50,000 + 78,450 = 3,28,450
Total Liabilities & Equity = 25,050 + 50,000 + 3,28,450 = 3,93,500
Balance Sheet (Vertical Format)
| Liabilities & Equity | Amount (Rs.) | Assets | Amount (Rs.) |
|---|---|---|---|
| Current Liabilities | Current Assets | ||
| - Creditors | 18,000 | - Cash | 1,00,000 |
| - Income Tax Payable | 7,050 | - Debtors | 11,000 |
| - Total Current Liabilities | 25,050 | - Closing Stock | 30,000 |
| - Total Current Assets | 1,41,000 | ||
| Non-Current Liabilities | Non-Current Assets | ||
| - Debentures | 50,000 | - Machinery (Net) | 2,12,500 |
| - Total Non-Current Liabilities | 50,000 | - Investment | 40,000 |
| - Total Non-Current Assets | 2,52,500 | ||
| Equity | Total Assets | 3,93,500 | |
| - Share Capital | 2,50,000 | ||
| - Retained Earnings (Net Profit) | 78,450 | ||
| - Total Equity | 3,28,450 | ||
| Total Liabilities & Equity | 3,93,500 |
Final Answer:
- Net Profit for the Year (Income Statement) = Rs. 78,450
- Total Assets (Balance Sheet) = Rs. 3,93,500
Discussion
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