Following Balance Sheet of M/S Combined Industriesrelates to the year ended

December 31, 2000.

Additional information:

1. Possibility of bad debts on Accounts Receivablehas not been considered yet. It is

estimated that baddebts will Rs. 20,000.

2. Rs. 150,000 representing cost of large scalenewspaper. Advertising campaign to

be completed in year2000 has been included in the inventories. It is alsofound

that inventoriesinclude merchandise Rs. 65,000 received on December 31,2000

has not been recordedas purchases.

3. Un-expired insurance consists of Rs. 4,000. Thecost of fire insurance for the year

2000 is Rs. 31,000includes the cash surrender value of officer lifeinsurance

policy.

4. Books show that plant & equipment has a costof Rs. 2,000,000 with

depreciation of Rs. 850,000 recognized in prior years.However, the balances

include fullydepreciated equipment of Rs. 150,000 that has been scraped andis

no longer inhand.

5. Accrued expenses ofRs. 25,000 represent accrued salaries of Rs. 35,000 lessnon

current advances ofRs. 10,000 made to company officials.

6. Loan payablerepresents a loan from bank that is payable in regularquarterly

installments of Rs.20,000. Interest of Rs. 2,000 accrued on the loan onDecember

31, 2000 has beenrecorded in the books.

Assignment NO-2 Financial Accounting II(MGT-401)

Fall Semester 2009

7. Tax liability notshown is estimated at Rs. 45,000.

8. Capital stock hadbeen issued for a total consideration of Rs. 1,850,000the

amount received is inexcess of par and stated values of the stock beingreported

as surplus. Capitalstock represents 100,000 shares of Rs. 10 each.

Required:

By consideringIAS (1) Presentation of Financial Statements, you are requiredto

preparecorrected Balance Sheet with accounts properlyclassified.