hi guys kindly help me in solving this question..
#question.. The following figures are taking from the book of Sheen Compnay limited as on December 31,2009
DEBIT SIDE :
opening stock Rs 75000
purchases 245000
wages 30000
carriage 950
furniture 17000
salaries 7500
rent 4000
trade expenses 7050
dividend paid 9000
debtors 27500
plant & machinery 29000
cash at bank 46200
patents 4800
bill receivables 5000
total 508000
CREDIT SIDE :
purchase return 10000
sales 340000
discount 3000
profit & loss 15000
share capital 100000
creditors 17500
general reserve 15500
bill payables 7000
total 508000
data for adjustment
a) closing stock was valued at retail price Rs 105600 which was 20% higher than cost price. Provide for income tax 19827. Depreciate plant & machinery at 15%, furniture aaaat 10% and patents at 5%. There was outstanding rent Rs 800 and salaries Rs 900. Make provision for bad debts Rs 501. Provide for manager remuneration at 10% of net profit before tax. The director proposed dividend at 10% on paid up capital. Prepare trading and profit and loss account for the year ended December 31, 2009 and balance sheet as at that date.

We will tell you what we tell everyone we don't provide model answers, do some work yourself and if you have a specific problem we will discuss it with you

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Originally Posted by paraclete

we will tell you what we tell everyone we don't provide model answers, do some work yourself and if you have a specific problem we will discuss it with you

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OK paraclete...
Thanks...
I will post ma work then plzzzzzzzzz tell me what mistake I made on it... :)

Quote:

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Originally Posted by paraclete

we will tell you what we tell everyone we don't provide model answers, do some work yourself and if you have a specific problem we will discuss it with you

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this is ma work bt I don't understand where I'm doing mistake can any one please point out the mistake in ma solution work??

Sheen Company
Income Statement
For the period ended on 31-12-2009

Sales 340000
Less: Cost of Goods Sold
Opening Stock 75000
Add Purchases 245000
Less: Discount Received (3000)
Carriage 950 (3950)
242950
Less Closing Stock (105600)
Cost of Good Sales (229850)
Gross Profit 110050
Add: overvaluation allowances 17600
127650
Less Operating Expenses
Wages 30000
Depreciation expenses
Plant & machinery 4350
Patents +240
Furniture +1700 6290
Bad debt expense 510
Rent expense (4000 + 800) 4800
Salaries expenses (7500 + 900) 7900
Trade expenses 7050
Total operating expenses (57050)
Net income before tax 70600
Less: manager’s remuneration (70600*10%) (7060)
63540
Less : provision for tax (19827)
Net income 43713
Less: general reserve (15500)
Dividend proposed (10000) (25500)
Profit for the year 28213
Add: beginning profit & loss 15000
Net income 33213


SHEEN COMPANY
Balance Sheet
As on 31-12-2009

Assets
Current Assets
Cash at bank 46200
Trade Debtors 27500
Prov. For B/Debts (510) 26990
Stock 88000
Bill receivable 5000

Fixed Assets
Furniture 17000
Prov. For Dep. (1700) 15300
Plant & machinery 29000
Prov. For Dep. (4350) 24650
Patents 4800
Less: prov. For Dep (240) 4560
Total Assets 210700

Liabilities
bill payable 7000
Provision for tax 19827
Outstanding Salaries 900
Accrued rent 800
Dividend payable 1000
Trade Creditors 17500
Managers remuneration 7060
Capital 100000
General reserve 15500
Net income 33213
Total Liabilities & O/Equity 202800

You need to revise you mathematics
Profit for the year 28213
Add: beginning profit & loss 15000
Net income 33213

Answer 43213

What is an overvaluation allowance how did you calculate that?

You do realise that the accounting methodology here is shonky, calculated to increase the stated profit and thus the manager's salary Why do you deduct the reserve

calculation for over valuation allowance
105600/1.20 and we got the costng value of ending stock as 88ooo..
and allownce for over valuation amount is 17600 is it wrong...