Active Ltd. purchased an agency to deal in sports equipment on April 1^st, 2013. On 31/3/2014 the company’s balance sheet appears as follows:

Assets
Current Assets
Cash			2000000
Acc. Rec.		4000000
	ADD	200000	3800000
Inventory			5000000
Investments
12% Bank Deposit			100000
Long Term Assets
Showroom (life 20 years)		5000000
	Accm. Dep.	250000	4750000
			15650000
Liabilities +O.E.
Current Liabilities
Acc. Payables			3000000
Dividends Payable			100000
Long Term Liabilities
5% Loan Payable			4000000
Owners’ Equity
Common Stock			5000000
Reserves and Surplus			3550000
			15650000

Additional information related to the company’s business transactions for the year ended 31-3-2015 is given below:

1. The company sold goods worth ‘6000,000. Out of these 80% were for credit and the rest were for cash. Additionally, on 1/2/2015, we received a cash advance worth ‘1000,000 from a customer for certain sports equipment to be delivered in equal installments over the next 10 months.

2. We collected ‘7,000,000 from our customers. Bad debts written off during the year amounted to 210,000 and 40,000 worth of bad debts that were previously written off were recovered during the year. The company maintains an ADD balance equal to 5% of the ending balance of Accounts Receivables.

3. The company purchased an inventory of sports goods worth ‘3000,000 on credit. It paid ‘5000,000 to its suppliers. The total value of inventory leaving the business (inventory sold) amounted to ‘4000,000.

4. On 1/7/2014, the company purchased land worth ‘1000,000. Half the land was purchased for cash and half of it was purchased through a 4% loan. On 1/4/2014 we purchased equipment worth 200,000. The equipment had a useful life of 10 years. We did not like the equipment so on 31/12/2014 we sold it off for 190,000.

5. Total salaries paid amounted to 500,000. Salaries worth 50,000 for the month of March 2015 were not yet paid. In 2015, Hyperactive invested 200,000 in the shares of another company and received dividends worth 20,000.

6. Dividends from the previous year were paid off during the year. The investments of the company carried an interest rate of 12% and all the interest due was not received during the year. The interest on all loans was paid in cash.

REQUIRED

Prepare the Balance Sheet and Income Statement for the year ended 31-3-2015

Answer rating: 100% (QA)

Answer Solution Income Statement For the Year Ended March 31 2015 Sales 6200000 Less Cost of goods sold 4000000 Goss profit 2200000 Less Operating expenses Salaries expense 550000 Bad debt expense 895... View the full answer