MGT 278C Assignment 1
NNS Hospitals Ltd. is a publicly owned company which owns a chain of hospitals. The Balance Sheet of NNS as of 31/3/2015 is given below:
Liabilities and Owners’ Equity |
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Accounts Payable |
120,000 |
|
Salaries Payable |
10,000 |
|
Provision for Taxes (2013-14) |
90,000 |
|
Provision for Taxes (2014-15) |
100,000 |
|
8% Bank Loan |
160,000 |
|
Share Capital |
400,000 |
|
Share Premium |
200,000 |
|
Retained Earnings |
20,000 |
|
TOTAL |
1,100,000 |
|
Assets |
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Cash |
80,000 |
|
Inventories of Medical Supplies |
120,000 |
|
Accounts Receivable |
100,000 |
|
Less: Allowance for Doubtful Debts |
-5,000 |
95,000 |
Advance Taxes Paid (2013-14) |
95,000 |
|
Advance Taxes Paid (2014-15) |
100,000 |
|
Prepaid Insurance |
20,000 |
|
Investments in 10% Government Bonds |
200,000 |
|
Land |
150,000 |
|
Building |
200,000 |
|
Less: Accumulated Depreciation |
-20,000 |
180,000 |
Equipment |
100,000 |
|
Less: Accumulated Depreciation |
-40,000 |
60,000 |
TOTAL |
1,100,000 |
Majority of the cash payments and receipts made during the year are given below:
Cash Receipts |
Cash Payments |
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Total Cash Collected from Patients |
700,000 |
Cash Paid for Staff Salaries |
110,000 |
Interest Received on Govt. Bonds |
20,000 |
Cash Paid for Accounts Payable |
300,000 |
Sale of Equipment (31/12/2015) |
15,000 |
Cash Paid for Utilities |
50,000 |
Dividends received |
5,000 |
Loan Repaid (31/3/2016) |
20,000 |
Doctors Honorarium |
140,000 |
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Equipment Purchase (30/9/2015) |
30,000 |
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Advance Tax Paid |
100,000 |
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Dividends paid |
50,000 |
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Investment in Stock of ND Co. |
20,000 |
Additional Details:
1. NNS provides services to certain patients on a credit basis. During the current financial year, $300,000 worth of services was provided to such patients on a credit basis and $310,000 was collected from such patients. Due to poor financial condition of certain patients, $6,000 was written-off as bad debts in March 2016. $2,000 worth of previously written-off amounts was collected in January 2016. The firm wishes to maintain a balance of 5% of year-end Accounts Receivable as an allowance for doubtful debts.
2. NNS purchases all inventory of medical supplies on credit. The total purchase in the current financial year amounted to $250,000. The ending balance of inventory of medical supplies was $90,000.
3. The interest on 8% Bank Loan is accrued, but due to a computer glitch, could not be paid till 10th April 2016. The company had to pay a penalty of $10,000 along with the interest on 10th April 2016 for late payment of interest. The penalty becomes due in the year of default.
4. The equipment has a useful life of 5 years and Building has a useful life of 10 years. The equipment that was sold on 31/12/2015 was two years old at the beginning of the year and had a historical cost of $20,000.
5. Salaries for the last two weeks of March 2015 will be paid on 5th April 2016. Such salaries amounted to $15,000. Salaries payable for previous years were paid off in the current year.
6. The prepaid insurance is valid for another 15 months starting from 1/4/2015.
7. Tax assessment for the years 2013-14 and 2014-15 was completed in the current year and the tax was assessed to be Rs. 100,000 for 2013-14 and 95,000 for 2014-15. Shortfall (refund), if any, was paid (received) during the year 2015-16. Provision for taxes for the current year is 25% of Profit before Tax.
8. 10,000 new shares were issued. The face value of shares was $1 and Market value was $20.
Based on the above information, prepare the Balance Sheet, Income Statement, and Cash Flow Statement (Use Indirect Method) for the year ended on 31/3/2016.