The Maritime Transport Company has submitted a request to prepare its financial statements on a correct...

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The Maritime Transport Company has submitted a request to prepare its financial statements on a correct basis as the Board of Directors and the shareholders and others have found that the financial statements prepared on the basis of historical cost have not been profitable or beneficial; the discussions and consultations have ended in the past weeks, that it is necessary to follow the foundations of the current cost accounting in preparing the new lists, and this is the first time that the company prepares the current cost lists for the year ending in the end of December 1993. The following historical accounts are required to be re-stated to the revised accounts, taking into account the effect of inflation and high prices. Summary of the Profit & Loss Account as of December 31st, 1993 Description Revenue Less: Beginning Inventory Purchases Ending Inventory Alexandria Maritime Transport Company Contribution Margin Profits from Sale of Assets Less: Depreciation Interest on Loans Profit Before Tax Less: Income Tax Provision Net Operating Profit After Tax Suggested Dividends Retained Earnings 0000's 1000 1530 (900) 110 100 0000's 2000 1630 370 30 400 210 190 100 90 75 15 Summary of the Statement of Balance Sheet as of December 31st, 1993 Description P,P, & E Cost Depreciation Current Assets Inventory Debtors Cash Total Current Assets Total Assets Equity Capital Common Stocks Reserves (Income Generating) Debts Current Liabilities Creditors Taxes Dividends TBA Total Current Liabilities Total Liabilities & Equity 31/12/1993 000's 900 400 100 120 200 75 000's 1100 300 800 1400 2200 600 505 700 375 2200 31/12/1994 000's 1000 500 200 475 150 75 000's 1000 210 790 1700 2490 600 490 700 700 2490 The following information was also given about the company and its accounts • A portion of the equipment and machinery whose cost on 1 January 1991 amounted to 100,000, has been sold at 11,000,000 on 12/13/1993 • With regard to the balance of machinery and equipment shown in the budget on 12/31/1992, I have purchased on past different dates as follows: 1/1/1990 1/1/1991 1/1/1992 • Additional machines were purchased on January 1, 1993, for an amount of 200,000 500000 100000 400000 • Machinery and equipment are depreciated by the straight-line method over 10 years • The company's inventory, which appears in the 1992 and 1993 budgets, was purchased during the last three months of the year and equally every month. • The cost of the current replacement (Current Replacement Cost) for the type of machines and equipment used by the company is increasing at a rate of 10% annually in the markets producing these machines. Date 1/10/1992 31/12/1992 1/7/19932 1/10/1993 31/12/1993 • The "Index Number" (or appropriate) for the company's sales prices and also for its sales prices during the period from 1/10/1992 to the end of December 1993 were as follows: Index Number 100 110 120 125 130 The Maritime Transport Company has submitted a request to prepare its financial statements on a correct basis as the Board of Directors and the shareholders and others have found that the financial statements prepared on the basis of historical cost have not been profitable or beneficial; the discussions and consultations have ended in the past weeks, that it is necessary to follow the foundations of the current cost accounting in preparing the new lists, and this is the first time that the company prepares the current cost lists for the year ending in the end of December 1993. The following historical accounts are required to be re-stated to the revised accounts, taking into account the effect of inflation and high prices. Summary of the Profit & Loss Account as of December 31st, 1993 Description Revenue Less: Beginning Inventory Purchases Ending Inventory Alexandria Maritime Transport Company Contribution Margin Profits from Sale of Assets Less: Depreciation Interest on Loans Profit Before Tax Less: Income Tax Provision Net Operating Profit After Tax Suggested Dividends Retained Earnings 0000's 1000 1530 (900) 110 100 0000's 2000 1630 370 30 400 210 190 100 90 75 15 Summary of the Statement of Balance Sheet as of December 31st, 1993 Description P,P, & E Cost Depreciation Current Assets Inventory Debtors Cash Total Current Assets Total Assets Equity Capital Common Stocks Reserves (Income Generating) Debts Current Liabilities Creditors Taxes Dividends TBA Total Current Liabilities Total Liabilities & Equity 31/12/1993 000's 900 400 100 120 200 75 000's 1100 300 800 1400 2200 600 505 700 375 2200 31/12/1994 000's 1000 500 200 475 150 75 000's 1000 210 790 1700 2490 600 490 700 700 2490 The following information was also given about the company and its accounts • A portion of the equipment and machinery whose cost on 1 January 1991 amounted to 100,000, has been sold at 11,000,000 on 12/13/1993 • With regard to the balance of machinery and equipment shown in the budget on 12/31/1992, I have purchased on past different dates as follows: 1/1/1990 1/1/1991 1/1/1992 • Additional machines were purchased on January 1, 1993, for an amount of 200,000 500000 100000 400000 • Machinery and equipment are depreciated by the straight-line method over 10 years • The company's inventory, which appears in the 1992 and 1993 budgets, was purchased during the last three months of the year and equally every month. • The cost of the current replacement (Current Replacement Cost) for the type of machines and equipment used by the company is increasing at a rate of 10% annually in the markets producing these machines. Date 1/10/1992 31/12/1992 1/7/19932 1/10/1993 31/12/1993 • The "Index Number" (or appropriate) for the company's sales prices and also for its sales prices during the period from 1/10/1992 to the end of December 1993 were as follows: Index Number 100 110 120 125 130

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ANSWER Summary of the Statement of Balance Sheet as of December 31st 1993 Assets Property Plant and ... View the full answer