Accounting, Lectures

1. Financial Accounting
1
Lecture – 43
Question
• Sheraz Limited is a manufacturing company
• You are provided with the trial balance and other information
of the company for the year ended June 30, 2002.
• You are also provided with the comparative figures of
balance sheet items.
Required
• You are required to prepare Financial Statements of the
Company for the year ended June 30, 2002.

2. Financial Accounting
2
Lecture – 43
Trial Balance
DEBIT CREDIT
Rs'000 Rs'000
Tangible Fixed Assets
Fixed Assts At Cost
Freehold Land 9,550
Building 15,815
Plant and Machinery 54,636
Furniture and Fixture 2,698
Motor Vehicles 24,111
Leased Vehicles 22,123
Accumulated Depreciation
Building 10,775
Plant and Machinery 47,315
Furniture and Fixture 2,474
Motor Vehicles 12,347
Leased Vehicles 12,186
Capital Work in Progress 4,075
Sheraz Ltd.
Trial Balance as On June 30 2002

3. Financial Accounting
3
Lecture – 43
Long Term Investments
Investment in Shares of Co. A 20,000
Investment in Shares of Co. B 2,500
Prov. For Diminution in Value Co. B 1,250
Term Deposits
Term Deposits (Long Term) 3,069
Current Assets
Stores and Spares 1,114
Stock in Trade Jul 01 2001 -
Raw Material 13,264
Packing Material 42,189
Finished goods 85,296
Trade Debts
Trade Debts 18,185
Provision for Doubtful Debts 223
Advances, Deposits & Prepayments -
Advances 2,434
Deposits 816
Prepayments 1,637

4. Financial Accounting
4
Lecture – 43
Accrued Profit on Bank Deposits 388
Advance Excise Duty 2,601
Sales Tax Refundable 8,492
Other Receivables 375
Dividend Receivable 25,000
Cash and Bank -
Cash in Hand 3,330
Cash at Bank - Current 25,024
Cash at Bank - Savings 16,521
Current Liabilities
Short Term Running Finance 5,257
Creditors, Accrued & Other Liabilities -
Creditors 63,016
Customers Deposits 22,571
Accrued Expenses 22,448
Other Liabilities 1,826
Tax Payable 3,858
Dividends 200

5. Financial Accounting
5
Lecture – 43
Long Term and Deff. Lia
Deferred Tax 3,000
Obligation Under Lease Finance 15,282
Share Capital 50,000
General Reserve 104,000
Sales -
Gross Sale - Domestic 751,244
Gross Sale - Export 93,305
Sales Tax 106,158
Cost of Sales
Purchases - Raw Material 291,569
Purchases - Packing Material 190,295
Overheads
Wages 23,155
Stores Consumed 7,922
Traveling and Conveyance 158
Repairs and Maintenance 10,267
Insurance 345
Fuel and Power 23,339
Wastage and Breakage 6,552
Excise Duty 49,671
Miscellaneous Expenses 7,412

6. Financial Accounting
6
Lecture – 43
Administrative Expenses -
Salaries and Wages 36,117
Postage and Telegram 1,652
Traveling and Conveyance 1,075
Repairs and Maintenance 1,272
Insurance 1,179
Printing and Stationery 1,121
Rent, Rates and Taxes 1,155
Auditors' Remuneration 161
Legal and Professional 768
Donations 81
General Expenses 400
Selling and Distribution Expenses -
Salaries and Wages 23,227
Postage and Telegram 1,578
Traveling and Conveyance 2,616
Repairs and Maintenance 6,168
Vehicle Running 859
Printing and Stationery 497
Rent, Rates and Taxes 1,954

7. Financial Accounting
7
Lecture – 43
Advertising 19,254
Outward Freight 9,628
Sales Staff Incentives 1,642
Petrol, Oil etc. 8,561
Miscellaneous Expenses 1,392
Financial Charges -
Markup on Loans 282
Finance Lease Charges 1,750
Bank Charges 825
Other Expenses and Provisions -
Other Income -
Profit on Bank Deposits 974
Dividend Income 25,100
Foreign Exchange Gain 5,732
Gain on Disposal of Fixed Assts. 692
Sale of Scrap 1,470
Income Tax for the year 14,800
Unappropriated Profit B/F 5,555
1,262,100 1,262,100

8. Financial Accounting
8
Lecture – 43
Adjustments
1 Provision for diminution in the value of investments to be
increased to Rs. 1,875,000
2 Long term deposits maturing during the year Rs. 291,000
3 Provision for doubtful debts to be increased by Rs. 987,000
4 60% Dividend declared.
5 Liability against lease finance payable in next financial year
Rs. 6,643,000
6 Autohrised capital consists of 10,000,000 shares of Rs. 10 each.
7 Transfer to general reserve Rs. 21,000
8 Addition in Fixed Assets, Plant and Mach. 2,262,000
Plant and Machinery Rs. 2,262,000
Furniture Rs. 989,000
Owned Vehicles Rs. 1,758,000
Additional Information

9. Financial Accounting
9
Lecture – 43
9 Cash received on disposal of vehicles Rs. 1,316,000
10 Depreciation Building 10% Plant and Furniture 15% and
Vehicles 20% on written down value.
No depreciation in year of sale and full dep in the year of
purchase.
11 Distribution of Depreciation
Building and Plant to Cost of Sales
Furniture and Owned Vehicles to Administrative Expenses
Leased Vehicles to Selling Expenses
12 Closing Stocks
Raw Material 27,545
Packing Material 74,731
Finished Goods 78,550
13 Tax paid during the year amounts to Rs. 16,414,000.

10. Financial Accounting
10
Lecture – 43
2002 2001
Note Rs'000 Rs'000
Sales 14 738,391 x
Cost of Goods Sold 15 572,210 x
Gross Profit 166,181 x
Sheraz Ltd.
Profit and Loss Account for the Year Ended June 30, 2002
Profit and Loss Account

11. Financial Accounting
11
Lecture – 43
14. Sales
2002 2001
Note Rs'000 Rs'000
Gross Sale - Domestic 751,244 x
Gross Sale - Export 93,305 x
Less: Sales Tax 106,158 x
738,391 x
Notes to the Accounts

12. Financial Accounting
12
Lecture – 43
15. Cost of Goods Sold
2002 2001
Note Rs'000 Rs'000
Raw Material - Opening Stock 13,264 x
Raw Material - Purchases 291,569 x
Less : Raw Material - Closing Stock 27,545 x
Raw Material Consumed 277,288 x
Packing Material - Opening Stock 42,189 x
190,295 x
Less: Packing Material - Closing Stock 74,731 x
Packing Material consumed 157,753 x
Overheads
Wages 23,155 x
Stores Consumed 7,922 x
Traveling and Conv. 158 x
Repairs and Maint. 10,267 x
Insurance 345 x
Fuel and Power 23,339 x
Wastage and Breakage 6,552 x
Excise Duty 49,671 x
Misc. Expenses 7,412 x
Depreciation 3.1 1,602 x
130,423 x
Cost of Production 565,464 x
Finished Goods - Opening Stock 85,296 x
Less: Finished Goods - Closing Stock 78,550 x
Cost of Goods Sold 572,210 x
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