MGT 101 Assignment Solution

Accounting Solutions Ltd. (ASL) is a small firm located in Lahore and is working in the field of accountancy, tax and audit. Mr. S.A. Butt (FCA) – a fellow of Institute of Chartered Accountant of Pakistan is the owner of this firm. He set up the firm in 2005 and owing to his untiring efforts and professionalism; the firm is ranked amongst the top 10 firms in the industry. The revenues of the firm have been doubled since its incorporation. For the Financial Year 2011, gross revenue has been recorded at Rs. 229,500 including credit sales as well. The firm is registered through SECP (Securities & Exchange Commission of Pakistan).

Following is trial balance of ASL for financial year 2010-2011.

Accounting Solutions Ltd. (ASL)
Trial Balance
For the year ended June 30, 2011

Rs. Rs.
Opening stock 6,000 Capital 135,000
Purchases 124,995 Bills payable 3,000
Carriage inward 4,020 Sundry creditors 76,890
Wages 10,350 Purchases return 3,000
Sales return 600 Loan 24,000
Carriage outward 1,185 Discount received 450
General expenses 960 Sales 229,500
Printing charges 660
Interest paid 570
Cash in hand 45,000
Cash at bank 54,000
Sundry debtors 84,000
Machinery 33,000
Furniture 9,000
Building 84,000
Drawings 9,000
Closing stock 4,500
471,840 471,840

Requirement: From the above given trial balance, you are required to prepare Profit and Loss Account (‘T’ account form) and balance sheet (report form) for the year ended 31st December, 2011. (10+08)

Note: 2 marks for formatting and presentation


C/f denotes Carried forward
B/f denotes Brought forward
it is just used as you transfer your closing balance of ledger a ledger to balance sheet or profit & loss account depending on its nature:
Gross Profit = net Sales – Cost of sales
Net Sales= Gross sales-sales return
Cost of sales = Opening Balance(Stock)+Net Purchases(Purchases-Purchase Returns)+direct expenses(Carriage Inward+Wages)
Net Profit= Gross Profit+Other Income(Discount Received)-Indirect Expenses(Carriage Outward+Interest Paid+Printing Charges+General Expenses)

For the year ended 30th June 2011
by: Abbas KSA
ASSETS Rs. Rs. Rs.
Current Assets
Closing Stock 4500.00
Sundry Debtors 84,000.00
Cash at Bank 54,000.00
Cash in Hand 45,000.00
Total Current Assets 187,500.00

Fixed Assets
Building 84,000.00
Furniture 9,000.00
Machinery 33,000.00
Total Fixed Assets 126,000.00
TOTAL ASSETS 313,500.00

Current Liabilities
Loan 24,000.00
Sundry Creditors 76,890.00
Bills Payable 3,000.00
Total Current Liabilities 103,890.00
Capital 135,000.00
Net Profit B/F 83,610.00
Drawings (9,000.00)
Total Capital 209,610.00
Total Liabilities 313,500.00

For the year ended 30th June 2011
Dr Cr
Rs. Rs.
Cost of Sales Sales (including Credit)
Opening Stock 6,000.00 Gross Sales 229,500.00
Purchases 124,995.00 Sales Returns (600.00)
Purchase Returns (3,000).00
Carriage Inward 4,020.00
Wages 10,350.00
Gross Profit 86,535.00
228,900.00 Net Sales 228,900.00
General & Administrative Expenses Gross Profit b/f 86535.00
Carriage outward 1,185.00
General Expenses 960.00
Printing Charges 660.00
Total Expenditure 2,805.00

Other Expenditure Other Income
Interest Paid 570.00 Discount Received 450.00
Total Other Expenditure 570.00 Total Other Income 450.00

Net Profit c/f 83,610
TOTAL 86985.00 TOTAL 86,985.00