Preparing financial statements using accrual basis, Financial Management

Question:

On a pilot basis a Government Department, PPO, is preparing its financial statements using accrual basis. The following information is provided:

The following balances appeared in the balance sheet of PPO at 31 March 2008.

                                                      Rs
Plant and equipment - cost        840,000
Accumulated depreciation          370,000

In the year ended 31 March 2009 the following transactions took place:

1. Plant which cost Rs 100,000 with a written down value of Rs 40,000 was sold for Rs 45,000 on 10 December.

2. New plant was purchased for Rs 180,000 on 1 October 2008. It is the policy of the company to charge depreciation at 10 per cent per year on a straight line basis, with a proportionate charge in the year of acquisition and no charge in the year of sale. None of the plant was over 10 years old at 31 March 2008.

Required:
(a) Prepare the following ledger accounts to record these transactions for the period. A cash account is not required.
(i) A Plant and Equipment Account
(ii) A Depreciation Account
(iii) A Disposal Account

(b) At 31 March 2008, PPO had a provision for doubtful debts of Rs10,000, appearing as a balance on the bad and doubtful debts account.

At 31 March 2009 trade debtors amounted to Rs 280,000 and on reviewing the balances it was decided to write off debts totalling Rs17,000 and to adjust the provision to five per cent of the debtors.

Show the bad and doubtful debts account for 2009

(c) Prepare extracts of Balance Sheet and Income Statement as at 31 March 2009 to show how the balances will be presented.

(d) Discuss how these transactions would be accounted using cash basis.

Posted Date: 11/21/2013 2:29:41 AM | Location : United States







Related Discussions:- Preparing financial statements using accrual basis, Assignment Help, Ask Question on Preparing financial statements using accrual basis, Get Answer, Expert's Help, Preparing financial statements using accrual basis Discussions

Write discussion on Preparing financial statements using accrual basis
Your posts are moderated
Related Questions
List the benefits of the flexible exchange rate regime. Answer:  The benefits of the flexible exchange rate system include: a) Automatic attainment of balance of payments eq

Q. Calculate Average Annual Return? An investor buys a bond in 1978 maturity in 1980 at Rs.900. It has a maturity value of 10 years and par value of Rs. 1000. It fetches RS.90

Parity Conditions A parity condition defines the relative value of one country's currency to the other country's currency. The condition states how, for the example, difference

Question 1: i) Performance budgeting is the best budgeting system. Discuss. ii) Why there is a need for implementing MTEF in the Mauritian Public Sector? Questi

How would you explain economic exposure to exchange risk? Answer: Economic exposure can be illustrated as the opportunity that the firm’s cash flows and so its market value may

N egotiation You can also negotiate with the bidders based on the requirements as mentioned below. You can negotiate only with the lowest evaluated responsive and qualified

Q. Credit Analysis for Formulation of Optimum Credit Policy? Credit Analysis: - Credit Analysis is made to estimate the credit worthiness of the customers before making credi

Limitations of participation: 1. Technology and organization today are so complex that specialized work roles are required making it difficult for people to participate succes

To determine Henkel's corporate beta, unlever (and relever) the ordinary least squares (OLS) market betas for each company in the European Household and Personal Care segment. Pric

In Time Series Analysis, we try to identify and determine the pattern of changes in the data collected over regular intervals of time. The data collected can be at a periodical int