CHAPTER-1: FINANCIAL STATEMENTS OF DIFFERENT SINGLE COMPANIES

CONCEPTUAL FRAMEWORK

The Conceptual Framework sets out the concepts that underlie the preparation and presentation
of financial statements for external users. The Conceptual Framework deals with:

 the objective of financial reporting (which is to provide financial information about the
reporting entity that is useful to existing and potential investors, lenders and other
creditors in making decisions about providing resources to the entity);
 the qualitative characteristics of useful financial information (relevance, faithful
representation, comparability, verifiability, timeliness and understandability); and
 the definition, recognition and measurement of the elements from which financial
statements are constructed (assets, liabilities, equity, income and expenses).

IFRS VS IAS

One of the major differences is that the series of standards in the IAS were published by the
International Accounting Standards Committee (IASC) between1973 and 2001, whereas, the
standards for the IFRS were published by the International Accounting Standards Board (IASB),
starting from 2001. When the IASB was established in 2001, it was agreed to adopt all IAS
standards, and name future standards as IFRS. One major implication worth noting, is that any
principles within IFRS that may be contradictory, will definitely supersede those of the IAS.
Basically, when contradictory standards are issued, older ones are usually disregarded.

List of IFRS
IFRS 1 First-time Adoption of International Financial Reporting Standards
IFRS 2 Share-based Payment
IFRS 3 Business Combinations
IFRS 4 Insurance Contracts
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
IFRS 6 Exploration for and Evaluation of Mineral Resources

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IFRS 7 Financial Instruments: Disclosures
IFRS 8 Operating Segments
IFRS 9 Financial Instruments
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IFRS 14 Regulatory Deferral Accounts
IFRS 15 Revenue from Contracts with Customers
IFRS 16 Leases
IFRS 17 Insurance Contracts
List of IAS
IAS 1 Presentation of Financial Statements
IAS 2 Inventories
IAS 7 Statement of Cash Flows
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
IAS 10 Events after the Reporting Period
IAS 11 Construction Contracts
IAS 12 Income Taxes
IAS 16 Property, Plant and Equipment
IAS 17 Leases
IAS 18 Revenue
IAS 19 Employee Benefits
IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
IAS 21 The Effects of Changes in Foreign Exchange Rates
IAS 23 Borrowing Costs
IAS 24 Related Party Disclosures
IAS 26 Accounting and Reporting by Retirement Benefit Plans
IAS 27 Separate Financial Statements
IAS 28 Investments in Associates and Joint Ventures

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IAS 29 Financial Reporting in Hyperinflationary Economies
IAS 32 Financial Instruments: Presentation
IAS 33 Earnings per Share
IAS 34 Interim Financial Reporting
IAS 36 Impairment of Assets
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
IAS 38 Intangible Assets
IAS 39 Financial Instruments: Recognition and Measurement
IAS 40 Investment Property
IAS 41 Agriculture
LIST OF BAS
BAS BAS Title BAS Effective Date
No.
1 Presentation of Financial Statements on or after 1 Jan 2010
2 Inventories on or after 1 January 2007
7 Statement of Cash Flows on or after 1 January 1999
8 Accounting Policies, Changes in Accounting on or after 1 January 2007
Estimates and Errors
10 Events after the Reporting on or after 1 January 1999
Period
11 Construction Contracts on or after 1 January 1999
12 Income Taxes on or after 1 January 1999
16 Property, Plant & Equipment on or after 1 January 2007
17 Leases on or after 1 January 2007
18 Revenue on or after 1 January 2007
19 Employee Benefits on or after 1 January 2013
20 Accounting of Government Grants and on or after 1 January 1999
Disclosure of Government Assistance
21 The Effects of Changes in Foreign Exchange on or after 1 January 2007
Rates
23 Borrowing Costs on or after 1 January 2010
24 Related Party Disclosures on or after 1 January 2007
26 Accounting and Reporting by Retirement on or after 1 January 2007
Benefit Plans
27 Separate Financial Statemens on or after 1 January 2013
28 Investments in Associates and Joint Ventures on or after 1 January 2013
IAS Financial Reporting in Hyperinflationary on or after 1 January 2015
29 Economics
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31 Interest in Joint Ventures on or after 1 January 2007
32 Financial Instruments: Presentation on or after 1 January 2010
33 Earnings per Share on or after 1 January 2007
34 Interim Financial Reporting on or after 1 January 1999
36 Impairment of Assets on or after 1st January 2005
37 Provisions, Contingent Liabilities and on or after 1 January 2007
Contingent Assets
38 Intangible Assets on or after 1 January 2005
39 Financial Instruments: Recognition and on or after 1 January 2010
Measurement
40 Investment Property on or after 1 January 2007
41 Agriculture on or after 1 January 2007
Adoption Status of International Financial Reporting Standards (IFRS) by ICAB as Bangladesh
Financial Reporting Standards (BFRS) as on 1 January 2013.

LIST OF BFRS

IFRS / Title Effective Date on or after

BFRS
BFRS 1 First-time adoption of International financial 1 January 2009
Reporting Standards
BFRS 2 Share-based Payment 1 January 2007
BFRS 3 Business Combinations 1 January 2010
BFRS 4 Insurance Contracts 1 January 2010
BFRS 5 Non-current Assets Held for Sale and Discontinued 1 January 2007
Operations
BFRS 6 Exploration for and Evaluation of Mineral 1 January 2007
Resources
BFRS 7 Financial Instruments: Disclosures 1 January 2010
BFRS 8 Operating Segments 1 January 2010
IFRS 9 Financial Instruments NA (Not yet adopted but
under review process)
BFRS Consolidated Financial Statements 1 January 2013
10
BFRS Joint Arrangements 1 January 2013
11
BFRS Disclosure of Interests in other Entities 1 January 2013
12
BFRS Fair Value Measurement 1 January 2013
13

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IAS-1: PRESENTATION OF FINANCIAL STATEMENTS

IAS 1 sets out overall requirements for the presentation of financial statements, guidelines for
their structure and minimum requirements for their content.

It requires an entity to present a complete set of financial statements at least annually, with
comparative amounts for the preceding year (including comparative amounts in the notes). A
complete set of financial statements comprises:

 a statement of financial position as at the end of the period;

 a statement of profit and loss and other comprehensive income for the period. Other
comprehensive income is those items of income and expense that are not recognized in
profit or loss in accordance with IFRS Standards. IAS 1 allows an entity to present a
single combined statement of profit and loss and other comprehensive income or two
separate statements;
 a statement of changes in equity for the period;
 a statement of cash flows for the period;
 notes, comprising a summary of significant accounting policies and other explanatory
information; and

IAS 1 also deals with going concern issues, offsetting and changes in presentation or
classification.

BASIC ELEMENTS OF FINANCIAL STATEMENTS:

Assets: Probable future economic events obtained or controlled by a particular entity as a result
of past transactions or events.

Liabilities: Probable future sacrifices of economic benefits arising from present obligations of a
particular entity to transfer assets or provide services to other entities in the future as a result of
past transactions or events.

Owner’s Equity: Residual interest in the assets of an entity that remains after deducting its
liabilities.

Revenues: Inflows or other enhancements of assets of an entity or settlement of its liabilities

during a period from delivering or producing goods, rendering services, or other activities that
constitute an entity’s major, ongoing operations.

Expenses: Outflows or other using up of assets or incurrence of liabilities during a period from
delivering or producing goods, rendering services, or carrying out other activities that constitute
the entity’s ongoing, major or central operations.

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Gains: Increases in net equity from peripheral or incidental transactions of an entity and from all
other transactions and other events and circumstances affecting the entity during a period except
those that result from revenues or investments by owners.

Losses: Decreases in equity from peripheral or incidental transactions of an entity and from all
other transactions and other events and circumstances affecting the entity during a period except
those that result from expenses or distributions to owners.

FORMS OF FINANCIAL STATEMENTS

Single-Step Income Statement for Service Company

Subtract total expenses from total revenues
Two reasons for using the single-step format:
1) Company does not realize any type of profit until total revenues exceed total expenses.
2) Format is simpler and easier to read.
Particulars Taka Taka
Revenues *******
Less: Expenses *******
Net Income *******

Multiple-Step Income Statement

Shows several steps in determining net income.
Two steps relate to principal operating activities.
Distinguishes between operating and non-operating activities.

Multi Step Income Statement for Merchandiser

Name of the organization (Merchandiser)
Income Statement
For the year ended 31st December, 2010
Particulars TK. TK. TK. TK.
Sales *****
Less: Sales return & allowance *****
Less: Sales discount ***** *****
Net Sales *****
Less: Cost of goods sold:
Opening inventory *****
Add: Purchase *****
Less: Purchase return *****
Less: Purchase discount ***** *****
Net Purchase *****
Cost of goods available for sale *****
Less: Ending inventory *****
Cost of goods sold *****

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 Gross Profit *****
Less: Operating Expenses:
Administrative expenses:
Office salaries *****
Rent expense *****
Office expense *****
Supplies expense *****
Depreciation expense *****
Insurance expense *****
Utilities expense ***** *****
Selling expenses:
Store/sales salaries *****
Advertising expense *****
Freight-out *****
Sales commission *****
Depreciation expense *****
Doubtful expense ***** *****
Total operating expense *****
Operating income *****
Add: Non-Operating income:
Interest revenue *****
Gain on sale of fixed asset ***** *****
Less: Non-operating expense
Interest expense *****
Loss on sale of fixed asset ***** (*****)
Income before tax *****
Less: Income tax *****
Net Income *****

Format for publicly limited companies

Name of the Company
Statement of Changes in Owners’ Equity
For the year ended 31st December, 2010
Name of accounts Common Additional Retained Reserves and Total
stock paid-in earnings surplus
capital
Opening balance ******* ******** ******* ****** *****
Issue of common stock ******* *****
Net income during the year ****** *****
Transfer to general reserve (*******) ******* (*****)
Proposed dividend ******* ******
Dividend paid ******* *******
Currency translation difference
Page 7 of 37
Total ********* ********* ********* ******** ********

Classified Balance Sheet (Service Company):

Name of the Company
Balance Sheet
As at 31st December, 2017
Tk. Tk. TK. TK.
Assets:
Current Assets:
Cash ********
Marketable securities ********
Notes Receivable ********
Accounts Receivable ********
Less: Doubtful accounts ********
Less: allowance for doubtful expense ******** ******* *********
Supplies *********
Inventory [ending] *********
Prepaid expenses ********
Total Current Assets ********
Long Term Investment:
Investment in Real Estate ********
Property, Plant and Equipment:
Building ********
Less: accumulated depreciation ******* *********
Furniture ********
Less: Accumulated depreciation ******** *********
Equipment ********
Less: Accumulated Depreciation ******** ********* **********
Intangible assets:
Goodwill ********
Trademarks ********
Copyright ********
Patents ********* **********
Total assets **********
Liabilities and Owners’ Equity
Liabilities:
Current Liabilities:
Accounts payable *********
Tax payable *********
Dividend payable *********
Expenses payable *********

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 Unearned revenue ********* **********
Long-Term Liabilities:
Bonds Payable **********
Mortgage Payable **********
Loan payable ********** **********
Owners’ Equity:
Common Stock ********
Retained Earnings ********
Ending Owners’ Equity ***********
Total of liabilities and owners’ equity ***********

Classified Balance Sheet (Merchandiser Company):

Name of the Company
Balance Sheet
As at 31st December, 2010
Tk. Tk. TK. TK.
Assets:
Current Assets:
Cash ********
Marketable securities ********
Notes Receivable ********
Accounts Receivable ********
Less: Doubtful accounts ********
Less: allowance for doubtful expense ******** ******* *********
Supplies *********
Inventory [ending] *********
Prepaid expenses ********
Total Current Assets ********
Long Term Investment:
Investment in Real Estate ********
Property, Plant and Equipment:
Building ********
Less: accumulated depreciation ******* *********
Furniture ********
Less: Accumulated depreciation ******** *********
Equipment ********
Less: Accumulated Depreciation ******** ********* **********
Intangible assets:
Goodwill ********
Trademarks ********
Copyright ********

Page 9 of 37
 Patents ********* **********
Total assets **********
Liabilities and Owners’ Equity
Liabilities:
Current Liabilities:
Accounts payable *********
Tax payable *********
Dividend payable *********
Expenses payable *********
Unearned revenue ********* **********
Long-Term Liabilities:
Bonds Payable **********
Mortgage Payable **********
Loan payable ********** **********
Stockholders’ Equity:
Common stock *********
Additional paid-in capital *********
Retained earnings *********
Reserves and surplus ********* *********
Total of liabilities and owners’ equity ***********

Multi Step Income Statement for Manufacturing Company

Name of the Company (Manufacturer)
Income Statement
For the year ended 31st December, 2017
Particulars TK. TK. TK. TK.
Sales *****
Less: Sales return & allowance *****
Less: Sales discount ***** *****
Net Sales *****
Less: Cost of goods sold:
Opening raw materials inventory *****
Add: Purchase of raw materials *****
Less: Purchase return *****
Less: Purchase discount ***** *****
Net Purchase *****
Cost of materials available *****
Less: Ending raw materials ****
Cost of materials used *****
(+) Direct labor ***** *****
(+) Manufacturing Overhead *****
Indirect materials *****
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 Indirect Labor *****
Supplies, factory *****
Insurance, factory *****
Rent, factory *****
Depreciation factory building *****
Total manufacturing overhead *****
Total manufacturing cost *****
(+) Beginning work in process *****
Total work in process *****
(-) Ending work in process *****
Cost of goods manufactured *****
(+) Beginning finished goods *****
Cost of goods available for sales ****
(-) Ending finished goods *****
Cost of goods sold *****
Gross Profit *****
Less: Operating Expenses:
Administrative expenses:
Office salaries *****
Rent expense *****
Office expense *****
Supplies expense *****
Depreciation expense *****
Insurance expense *****
Utilities expense ***** *****
Selling expenses:
Store/sales salaries *****
Advertising expense *****
Freight-out *****
Sales commission *****
Depreciation expense *****
Doubtful expense ***** *****
Total operating expense *****
Operating income *****
Add: Non-Operating income:
Interest revenue *****
Gain on sale of fixed asset ***** *****
Less: Non-operating expense
Interest expense *****
Loss on sale of fixed asset ***** (*****) *****
Income before tax *****
Less: Income tax *****
Net Income *****
Page 11 of 37
Classified Balance Sheet (Merchandiser Company):
Name of the Company
Balance Sheet
As at 31st December, 2010
Tk. Tk. TK. TK.
Assets:
Current Assets:
Cash ********
Marketable securities ********
Notes Receivable ********
Accounts Receivable ********
Less: Doubtful accounts ********
Less: allowance for doubtful expense ******** ******* *********
Supplies *********
Inventory:
Raw materials *******
Work in process *******
Finished goods ******* *******
Prepaid expenses ********
Total Current Assets ********
Long Term Investment:
Investment in Real Estate ********
Property, Plant and Equipment:
Building ********
Less: accumulated depreciation ******* *********
Furniture ********
Less: Accumulated depreciation ******** *********
Equipment ********
Less: Accumulated Depreciation ******** ********* **********
Intangible assets:
Goodwill ********
Trademarks ********
Copyright ********
Patents ********* **********
Total assets **********
Liabilities and Owners’ Equity
Liabilities:
Current Liabilities:
Accounts payable *********
Tax payable *********
Dividend payable *********

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 Expenses payable *********
Unearned revenue ********* **********
Long-Term Liabilities:
Bonds Payable **********
Mortgage Payable **********
Loan payable ********** **********
Stockholders’ Equity:
Common stock *********
Additional paid-in capital *********
Retained earnings *********
Reserves and surplus ********* *********
Total of liabilities and owners’ equity ***********
FINANCIAL STATEMENT FOR SERVICE COMPANY

(1) FINANCIAL STATEMENT FROM UNADJUSTED TRIAL BALANCE:

PROBLEM-01:
The following particulars are extracted from the books of Rahul Telecom Company
relating to the year ended December 31, 2023.
Rahul Telecom Company
Trial Balance
December 31, 2017
Account Titles Debit (Tk.) Credit (Tk.)
Cash 30,000
Accounts Receivable 16,500
Supplies 13,500
Prepaid Insurance 9,000
Office Equipment 30,000
Prepaid Advertising 6,000
Accumulated Depreciation-Office Equipment 3,000
Accounts Payable 4,500
Capital (1.1.2017) 50,000
Retained Earnings (1.1.2017) 4,000
Utilities expense 6,000
Service Revenue 105,000
Miscellaneous Expense 36,000
Rent Expense 13,500
Salaries Expense 6,000
Total 166,500 166,500
Additional information:
1. Telephone bill for December is unpaid Tk.1, 950.
2. Unpaid salaries areTk.600.

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 3. Unrecorded service Tk. 10,500.
4. Depreciation expenses for the year on the office equipment is Tk.2, 550.
5. Supplies on hand on December 31, 2023 Tk.9, 000.
Required:
a. Prepare a single-step income statement.
b.. An owner's equity statement; and
c. A classified balance sheet in report form.
SOLUTION
Requirement a.
Rahul Telecom Company
Income Statement
For the Year Ended December 31, 2023
Particulars Amount-Tk. Amount-Tk.
Revenues:
Service Revenue 105,000
Add: Service Revenue (unrecorded) 10,500 115,500
Less: Operating Expenses:
Salaries Expense 6,000
Add: Salaries Expense (accrued) 600 6,600
Rent Expense 13,500
Miscellaneous Expense 36,000
Telephone Bill Expense 1,950
Depreciation Expense-Office Equipment 2,550
Utilities expenses 6,000
Supplies 13,500
Less: Supplies on Hand 9,000 4,500
Total Operating Expense 71,100
Net Operating Income 44,400
Requirement b.
Rahul Telecom Company
Owner's Equity Statement
December 31, 2023
Capital Additional Retained Reserve Total
Particulars paid-in- Earnings and surplus
Beginning Balance 50,000 4,000 54,000
Net Income 44,400 44,400
Ending Balance 50,000 48,400 98,400

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Requirement c.

Rahul Telecom Company

Balance sheet
As at December 31, 2023
Items Taka Taka
Assets
Current Assets
Cash 30,000
Accounts Receivable 16,500
Add: Accounts Receivable (Unrecorded) 10,500 27,000
Supplies on Hand 9,000
Prepaid Insurance 9,000
Prepaid Advertising 6,000
Total Current Assets 81,000
Long-term Investment Nil
Property, Plant and Equipment
Office Equipment 30,000
Less: Accumulated Depreciation (3,000+2,550) 5,550
Total Property, Plant and Equipment 24,450
Intangible Assets Nil
Total Assets 105,450
Liabilities and Owner's Equity
Liabilities
Current Liabilities:
Account Payable 4,500
Telephone Bill Payable (accrued) 1,950
Salaries Payable (accrued) 600
Total Current Liabilities 7,050
Long-Term Liabilities Nil Nil
Total Liabilities 7,050
Owner's Equity
Capital 50,000
Retained Earnings 48,400
Total Owners’ Equity 98,400
Total Liabilities and Owner's Equity 105,450
The following

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(2) FINANCIAL STATEMENT FROM ADJUSTED TRIAL BALANCE:
PROBLEM-02:
The following adjusted trial balance of Oporupa Beauty Parlor Ltd., as of December 31, 2023
Oporupa Beauty Parlor Ltd.
Adjusted Trial Balance
As on December 31, 2023
Account Titles Debit (Tk.) Credit (Tk.)
Cash 44,000
Accounts receivable 16,400
Supplies 7,200
Supplies expense 10,800
Equipment 6,00,000
Accumulated Depreciation-Equipment 1,20,000
Unearned Membership Fees 64,000
Notes Payable 80,000
Capital 2,33,000
Fees Received 4,40,000
Salaries expense 1,55,200
Salaries payable 3,200
Interest expense 20,000
Interest payable 5,000
Fees Receivable 48,000
Depreciation Expense 60,000
Retained Earnings (1.1.2023) 16,400
Total 9,61,600 9,61,600
Required:
a. Prepare income statement and statement of owner's equity for the year ended
December 31 and
b. A balance sheet as on December 31, 2023.
SOLUTION:
Requirement a.
Oporapa Beauty Parlor Ltd.
Income Statement
For the Year Ended December 31, 2023
Particulars Amount-Tk Amount-Tk
Revenues
Fees Received 440,000
Less: Operating Expenses
Salaries Expense 155,200
Supplies Expense 10,800
Depreciation Expense 60,000 2,26,000
Operating Income 2,14,000
Less: Non-operating expenses
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 Interest Expense 20,000 20,000
Net Income 194,000
Oporupa Beauty Parlor Ltd.
Owner's Equity Statement
December 31, 2023
Capital Additional paid-in- Retained Reserve Total
Particulars capital Earnings and surplus
Beginning Balance 2,33,000 16,400 2,49,400
Net Income 1,94,000 1,94,000
Ending Balance 2,33,000 2,10,400 4,43,400
Requirement b.
Oporupa Beauty Parlor Ltd.
Balance Sheet
As on December 31, 2017
Items Taka Taka
Assets
Current Assets:
Cash 44,000
Accounts Receivable 16,400
Supplies 7,200
Fees Receivable 48,000
Total Current Assets 1,15,600
Long-Term Investment Nil
Property, Plant and Equipment:
Equipment 600,000
Less: Accumulated Depreciation 120,000
Total Property, Plant and Equipment 480,000
Total Assets 5,95,600
Liabilities and Owner's Equity
Current Liabilities:
Interest Payable 5,000
Unearned Fees 64,000
Salaries Payable 3,200
Total Current Liabilities 72,200
Long-Term Liabilities:
Notes Payable 80,000
Total Liabilities 1,52,200
Owner's Equity:
Capital 2,33,000
Retained Earnings 2,10,400
Total Owners’ Equity 4,43,400
Total Liabilities and Owner's Equity 5,95,600

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 FINANCIAL STATEMENT FOR MERCHANDISING COMPANY:
(1) FINANCIAL STATEMENT FROM UNADJUSTED TRIAL BALANCE:
PROBLEM-03:
The following is the Trial Balance of Jessore Traders Ltd. as on December 31, 2023 at the end of
the accounting period.
Jessore Traders Ltd.
Trial Balance
December 31, 2023
Account Titles Debit (Tk.) Credit (Tk.)
Cash 50,000
Accounts Receivable 76,000
Merchandize Inventory (ending) 180,000
Land 184,000
Building 394,000
Accumulated Depreciation-Building 108,000
Equipment 167,000
Accumulated Depreciation-Equipment 84,800
Notes Payable (40% due in 2024) 100,000
Accounts Payable 75,000
Common stock 5,15,600
Sales 1,808,200
Sales Discounts 9,200
Cost of Goods Sold 1,419,800
Sales Salaries 139,600
Utilities Expense 38,800
Repair Expense 11,800
Gas and Oil Expense 14,400
Insurance Expense 7,000
Total 2,691,600 2,691,600
Adjustments:
1. Depreciation is Tk.20,000 on building and Tk.16,000 on equipment (both are
administrative expense)
2. Interest Tk.18, 000 is unpaid on notes payable on December 31.
3. Merchandize inventory is actually on hand is Tk.198, 400.
4. Salaries are 75% selling and 25% administrative.
5. Utilities expense, repair expense and insurance expense are 100% administrative.
6. Gas and oil expense is a selling expense.
Required
a. A multiple step income statement.
b. Owner's equity statement; and
c. A Classified balance sheet.
Solution
Page 18 of 37
Requirement a.

Jessore Traders Ltd.

Income Statement
For the Year Ended December 31, 2023
Particulars Amount-Tk. Amount-Tk. Amount-
Sales 1,808,200
Less: Sales Discount 9,200
Net Sales 1,799,000
Less: Cost of Goods Sold
Cost of Goods Sold 1,419,800
Less: Value Decrease of Merchandizing 18,400 1401,400
IGrosst Profit 397,600
Less: Operating Expenses
Selling and Distribution Expenses:
Sales Salaries (75%) 104,700
Gas and Oil Expense 14,400
Total Selling and Distribution Expenses 119,100
General and Administration Expenses: -
Salaries Expense (25%) 34,900
Utilities Expense 38,800
Repair Expense 11,800
Insurance Expense 7,000
Depreciation Expenses:
Building 20,000
Equipment 16,000
Total General and Administration Expenses 128,500
Total Operating Expense 247,600
Income from Operating Activities 150,000
Non-operating Income and Expenses:
Non- operating Income Nil
Interest Expense on Notes Payable (18,000) (18,000)
Net Income 132,000
Requirement b.
Jessore Traders Ltd.
Owner's Equity Statement
For the Year Ended December 31, 2023
Common Additional Retained Reserve and Total
Particulars Stock paid-in-capital Earnings surplus
Beginning Balance 5,15,600 5,15,600
Net Income 1,32,000 1,32,000
Ending Balance 5,15,600 1,32,000 6,47,600

Page 19 of 37
Requirement c.
Jessore Traders
Balance Sheet
As at December 31, 2023
Amount-Tk. Amount-Tk. Amount-Tk,
Assets
Current assets:
Cash 50,000
Accounts Receivable 76,000
Merchandize Inventory 198,400
Total Current Assets 324,400
Property, Plant and Equipment:
Land 184,000
Building 394,000
Less: Ace. Dep.-Land (108,000+20,000) 128,000 266,000
Equipment 167,000
Less: Ace. Dep.- Equipment (84,800+16,000) 100,800 66,200
Total Property, Plant and Equipment 516,200
Total Assets 840,600
Liabilities and Owner's Equity
Current Liabilities:
Notes Payable in 2024 40,000
Accounts Payable 75,000
Interest Payable 18,000
Total Current Liabilities 133,000
Long-Term Liabilities:
Notes Payable (100,000-40,000) 60,000
Total Liabilities 193,000
Owner's Equity:
Common Stock 5,15,600
Retained Earnings 1,32,000
Total Liabilities and Owner's Equity 840,600
(2) FINANCIAL STATEMENT FROM ADJUSTED TRIAL BALANCE:

PROBLEM-04:
The following is the adjusted trial balance of the Unique Business Link Ltd. on December
31, 2017 the end of its calendar year. The Business Link was organized on January 01, 2023.
Unique Business Link Ltd.
Adjusted Trial Balance
December 31, 2023
Account Titles Dr (Tk,) Cr (Tk.)
Cash 9,500
Accounts Receivable 5,800
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 Investment 15,650
Plant and Machinery 23,000
Accounts Payable 10,000
Accumulated Depreciation- Plant and Machinery 8,550
10% Loan on Mortgage 10,500
Common Stock 28,900
Sales Revenues 35,900
Purchase Discounts 1,100
Beginning merchandise inventory 10,500
Sales Discounts 2,100
Purchases 16,500
Bad Debts Expenses. 1,250
Advertising Expenses 2,225
Transportation-In 800
Repair Expense 4,000
Sales Salaries Expense 2,400
Interest expense 1050
Interest payable 1,050
Loss on fire 800
Prepaid advertising expense 2,225
Amount receivable from insurance company 800
Ending Merchandise inventory Tk. 7,000
Required:
a. Prepare an Income Statement (multiple-step).
b. A Statement of Owner's Equity; and
c. A classified Balance Sheet.
Solution
Requirement a.
Unique Business Link Ltd.
Income Statement (multiple-step)
For the Year Ended December 31, 2023
Particulars Amount Amount (Tk.) Amount
Revenues
Sales Revenue 35,900
Less: Sales Discount 2,100
Net Sales 33,800
Less: Cost of Goods Sold
Beginning Inventory 10,500
Add: Purchase 16,500
Less: Purchase Discount 1,100
15,400
Add: Transportation-In 800
Net Purchases 16,200
Cost of Goods Available for Sale 26,700
Less: Ending Inventory 7,000
Page 21 of 37
 Cost of Goods Sold 19,700
Gross Profit 14,100
Less: Operating Expenses
Selling and Distribution Expenses:
Sales Salaries Expenses 2,400
Advertising Expenses 2,225
Bad Debts Expenses 1,250
Total Selling and Distribution Expenses 5,875
General and Administrative Expenses:
Repair Expense 4,000
Total Operating Expenses 7,275
Income from Operations 6,825
Non-Operating Income/Expenses:
Interest Expenses (1,050)
Loss on Fire (800) (1,950)
Net Income 4,975
Requirement b.
Unique Business Link Ltd.
Owner's Equity Statement
For the Year Ended December, 2023
Common Additional Retained Reserve and Total
Particulars Stock paid-in-capital Earnings surplus
Beginning Balance 28,900 28,900
Net Income 4,975 4,975
Ending Balance 28,900 4,975 33,875
Requirement c

Unique Business Link Ltd.

Balance Sheet (classified)
As on December 31, 2023
Amount-Tk. Amount- Amount-Tk.
Assets
Current Assets:
Cash 9,500
Accounts Receivable 5,800
Merchandize Inventory 7,000
Prepaid Advertising 2,225
Amount Receivable from Insurance 800
Total Current Assets 25,325
Investment and Fund:
Investment 15,650
Property, Plant and Equipment:
Plant and Machinery 23,000
Lees: Accumulated Depreciation 8,550 14,450
Intangible Assets Nil
Page 22 of 37
 Total Assets 55,425

Liabilities and Owner's Equity

Liabilities:
Current Liabilities:
Accounts Payable 10,000
Interest Payable 1,050
Total Current Liabilities 11,050
Long-.Term Liabilities:
10% loan on Mortgage 10,500
Total Liabilities 21,550
Owner's Equity:
Common stock 28,900
Retained earnings 4,975
Liabilities and Owner's Equity 55,425

PROBLEM-05:
The Authorized capital of ABC ltd is Tk 5, 00,000 consisting of 2,000, 6% preference shares of
Tk 100 each and 30,000 shares of Tk 10 each. The following was the trial Balance of ABC ltd.
ABC Ltd
Trial Balance
As on 31st March, 2021
Debit Taka Credit Taka
Beginning Stock 1/4/2020 1,45,200 Accounts payable 87,850
Investment in share 50,000 6% preference share capital 2,00,000
Purchase 4,90,500 Equity share capital 2,00,000
Selling expense 79,100 5% Mortgage Debenture secured on 1,50,000
freehold property
Salaries and wages 52,000 Dividend revenue 4,250
Cash in hand 12,000 Retained earnings 28,500
Interim preference Dividend 6,000 Sales revenue 6,70,350
for half year
Discount on issue of 2,000 Bank overdraft 1,50,000
Debenture
Preliminary Expenses 1,000
Bills (Notes) receivable 41,500
Interest on Bank overdraft 7,800
Interest on Debenture up to 3,750
30/09/2020
Account receivable 50,100
Freehold property at cost 3,50,000
Furniture less depreciation 35,000

Page 23 of 37
(15,000)
Income tax paid in Advance 10,000
Technical know-how fees 1,50,000
Audit fees 5,000
Total 14,90,950 Total 14,90,950
Additional Information:
(i) Closing Stock was valued at Tk 1,52,500. [deduct from cost of goods available for sales
and add with current assets]
(ii) Purchase includes Tk 4,000 worth of Goods and articles distributed among valued
customer. [deduct from purchase; add with selling expense]
(iii)Bills receivable includes Tk 1,500 being dishonored bills, 50% of which considered
irrecoverable. [deduct 1,500 from bills receivable;750 add with accounts receivable;
750 uncollectible expense in administrative expense]
(iv) Depreciation on Furniture 20%. [depreciation expense and add with accumulated
depreciation]
(v) Tk 1,000 of discount on Debenture to be written off. [deduct from debenture 1,000 or
deduct from discount on debenture; other expense]
(vi) Provided provision for taxation Tk 8,000. [deduct from income before tax, current
liability]
(vii) Technical know-how fees to be written off over the period of 10 years. [deduct
technical know-how and expense]
(viii) Tk 500 of preliminary expenses to be written off. [deduct from preliminary expense,
expense]
(ix) Board of directors declared 20% dividend. [deduct from r/e and dividend payable]

Prepare:
A) Multiple –Step Income Statement
B) Statement of Retained earnings
C) Classified Balance sheet
SOLUTION-05:
ABC Ltd
Multiple Step Income Statement
For the year ended 31st March,2014.
Particulars Amount Amount
Sales Revenue 6,70,350
Less: Cost of goods sold
Beginning Inventory 1,45,200
Add: Purchase 4,90,500
Less: Goods distributed To Valued customers (4,000)
Cost of goods available for sale 6,31,700
Less: Ending inventory 1,52,500
Cost of goods sold 4,79,200
Gross Margin 1,91,150
Less: Operating Expenses:
(a) General and Administrative Expenses:
Salaries and wages 52,000
Page 24 of 37
 Depreciation of Furniture 10,000
Uncollectible expenses 750
Written off technical know-how fees 15,000
Written off of preliminary expenses 500
Audit fees 5,000
Total general and administrative expenses 83,250
(b) Selling and Marketing expenses:
Selling expenses 79,100
Goods distributed to valued customers 4,000
Total selling and marketing expenses 83,100
Total operating expenses 1,66,350
Operating Income 24,800
Other revenues and expenses:
Other revenues:
Dividend revenue 4,250
Other expenses:
Interest on bank overdraft 7,800
Interest on Debenture paid 3,750
Add: Accrued interest expenses on Debenture 3,750 7,500
Written off of discount on debenture 1,000
(16,300)
(12,050)
Income Before income tax 12,750
Less: Income tax paid in advance 10,000
Income tax provision 8,000
(18,000)
Net income/ (net loss) (5,250)
ABC Ltd
Retained Statement
For the year ended 31st March, 2021.
Particulars Amount Amount
Beginning Balance, 1st April, 2020 28,500
Add: Net Income/ (net loss) (5,250)
Less: Interim Pref. Dividend (for half year) 6,000
Final Dividend for Pref. Dividend 6,000
Equity Dividend Declared 40,000
(52,000)
Ending Balance, 31st March,2021 (28,750)

ABC Ltd
Balance Sheet
As at 31st March, 2021
Assets Amount Amount Amount
Fixed Assets:
Furniture 50,000
Less: Acc. dep. [15,000 + 50,000 x 20%] 25,000
25,000
Preliminary expenses 1,000
Less: Written off 500
Page 25 of 37
 500
Freehold property at cost 3,50,000
Technical know-how fees 1,50,000
Less: Written off 15,000
1,35,000
Total fixed assets 5,10,500
Current Assets:
Cash in hand 12,000
Stock or inventory 1,52,500
Investment in shares 50,000
Bills Receivable 41,500
Less: Bill dishonored 1,500
40,000
Accounts receivable 50,100
Add: Bill Receivable dishonored recoverable 750
50,850
Total current assets 3,05,350
Total Assets 8,15,850
Liabilities and Shareholders’ Equity Amount Amount Amount
Shareholders’ Equity:
Authorized Capital:
2,000 shares Pref.@ tk.100 each 2,00,000
30,000 shares @ tk. 10 each 3,00,000
Issued, subscribed, called up and paid-up equity capital:
6% pref. Share capital 2,00,000
Equity share capital 2,00,000
Retained earnings (28,750)
Total shareholders’ equity 1,71,250
Long term liabilities:
5% mortgage Debenture 1,50,000
Less: Discount on issue 1,000
Total long-term liabilities 1,49,000
Current liabilities:
Accounts payable 87,850
Bank overdraft 1,50,000
Equity dividend payable 40,000
Pref. Dividend payable 6,000
Income tax provision 8,000
Interest on Debenture payable 3,750
Total current liabilities 2,95,600
Total Liabilities and Shareholders’ Equity 8,15,850
PROBLEM-06
You are given the following information of Bexi Fabrics Company Ltd.
Trial Balance
For the year ended 31st December, 2015
Particulars Dr (TK.) Particulars Cr (TK.)
Cash & Bank 50,000 Accounts payable 51,000

Page 26 of 37
 Accounts receivable 48,000 Accumulated dep. on premises 5,000
Opening inventory 39,000 Accumulated dep. on machinery 4,000
Supplies 6,000 Notes payable 25,000
Premises 80,000 Common stock (50,000) 1,50,000
Machinery 60,000 Retained earnings 40,000
Cash dividend declared 9,500 Sales 1,47,000
Sales return & allowances 10,500 Purchase -return 7,000
Purchases 72,000 Commission revenue 15,000
Carriage inward 4,000 Allowances for doubtful debts 6,000
Sales salaries 8,000
Rent (1/4 for factory) 12,000
Direct labor & wages 11,000
Mobile & Telephone bill 3,000
General expenses 7,000
Preliminary expenses 22,000
Import duty 8,000
Total 4,50,000 Total 4,50,000
Additional Information:
(i) Ending inventory Tk. 73,000 and supplies Tk. 2,500.
(ii) Machine worth Tk. 6,000 that purchased on 1st October, 2015 has been included in
purchase.
(iii)Accrued rent expenses are Tk. 4,000 and sales salaries expenses for 2 months.
(iv) Goods returned to supplies Tk. 2,000 but not recorded at the end of the period.
(v) Estimated dep. On premises 10% and on machinery 5%
(vi) Interest incurred on notes payable Tk. 2,500 but not cleared
(vii) Tk. 4,000 of accounts receivable is uncollectible, Allowances for doubtful account to be
increased by 5%.
(viii) Bank dishonored a check of Tk. 4,000.

Prepare: Multiple-step Income Statement, Retained Earnings Statement and classified Balance
Sheet.
SOLUTION-06
Bexi Fabrics Company Ltd.
Multiple-Step Income Statement
For the year ended 31st December,2015
Particulars Amount Amount Amount
Net Sales Revenue:
Sales Revenue 1,47,000
Less: Sales return and allowances 10,500
Net sales revenue 1,36,500
Less: Cost of Goods sold:
Beginning inventory 39,000
Add: Purchase 72,000
Less: Purchase returns [7,000+2,000] (9,000)
Less: Purchase of Machine (6,000)
Add: Carriage inward 4,000
Page 27 of 37
 Add: Import Duty 8,000
Cost of purchase 69,000
Add: Direct labor and wages 11,000
Add: Factory rent [(12,000+4,000)/4] 4,000
Cost of goods available for sale 1,22,000
Less: Ending Inventory 73,000
Cost of goods sold 50,000
Gross Margin 86,500
Less: Operating expenses:
(a) General and administrative expenses:
Office rent [12,000+4,000] x ¾ 12,000
Mobile and telephone Bill 3,000
General expenses 7,000
Supplies expense [6,000-2,500] 3,500
Uncollectible expenses 4,000
New provision for doubtful A/c 2,200
Depreciation expense on premises 8,000
Dep. expenses on machinery 3,075
Total general and administrative expenses 42,775
(b) Selling and Marketing Expenses:
Selling salaries [8,000 x 12/10] 9,600
Total selling and marketing expenses 9,600
Total operating expenses 52,375
Operating Income 34,125
Other revenues and expenses:
Other revenues:
Commission revenue 15,000
Other expenses:
Interest expense on notes payable (2,500)
12,500
Net income 46,625

Bexi Fabrics Company Ltd.

Statement of Retained Earnings
For the year ended 31st December,2015
Particulars Amount Amount
Beginning Balance, 1st January, 2015 40,000
Add: Net Income 46,000
86,625
Less: Cash Dividend Declared (9,500)
Ending Balance, 31st December,2015 77,125

Bexi Fabrics Company Ltd.

Balance Sheet
As at 31st December,2015.

Assets Amount Amount Amount

Fixed Assets:
Premises 80,000
Page 28 of 37
 Less: Acc. Dep. 13,000
67,000
Machinery 60,000
Add: purchase 6,000
Less: Acc. Dep. (7,075)
58,925
Preliminary Expenses 22,000
Total fixed assets 1,47,925
Current Assets:
Cash and Bank 50,000
Add: Check dishonored 4,000
54,000
Stock or inventory 73,000
Supplies 2,500
Accounts Receivable 48,000
Less: Uncollectible exp. 4,000
Less: Allowance for doubtful A/C [6,000+2,200] 8,200
35,800
Total current assets 1,65,300
Total Assets 3,13,225
Liabilities and Shareholders’ Equity Amount Amount Amount
Shareholders’ Equity:
Issued, Subscribed, Called-up and paid up- capital 1,50,000
Retained Earnings 77,125
Total shareholders’ equity 2,27,125
Long-term liabilities:
Notes payable 25,000
25,000
Current liabilities:
Accounts payable 51,000
Add: Check dishonored 4,000
Less: Goods returned (2,000)
53,000
Rent payable 4,000
Salary payable [8,000 x 2/10] 1,600
Interest payable 2,500
Total current liabilities 61,100
Total Liabilities and Shareholders’ Equity 3,13,225
PROBLEM-07
Daffodils computer Ltd. provide the following information

Daffodils Computer Ltd.

Trail Balance
For the year ended 31st December 2012
Particulars DR. (TK) CR(TK) Particulars DR. (TK) CR(TK)
6% Preference share 3,00,000 Furniture 75,000
Equity share 2,25,000 Sales 9,18,600
Page 29 of 37
 Goodwill 1,00,000 Purchase 4,76,500
5% Mortgage debenture 2,10,000 Bills receivable 6,000
Account Receivable 1,67,500 Freight in wards 3,750
Account payable 1,25,520 Investment in shares 60,000
Free hold property 3,90,000 Interest on debenture 5,250
Stock (01/01/2012) 2,41,500 Dividend 20,250
General Reserve 82,725 Preference dividend 9,000
Salaries 1,03,500 Share forfeiture 2,000
Retained Earnings 58,500 Cash in hand 14,145
Dividend received 8,800 Bank Balance 97,500
Delivery expenses 1,02,000 General expenses 21,000
Rent expenses 38,250 Total 18,41,145 18,41,145

Additional Information:
i. Closing stock was valued at tk. 2,15,000 [deduct from cost of goods available for sale, add
with current asset]
ii. Goodwill is to be written- off at 10%. [deduct from goodwill and add with operating
expense]
iii. Bills receivable tk. 2,000 being dishonored at 30/11/2012 and recoverable. [deduct from
bills receivable, add with accounts receivable]
iv. Provide dep. at 10 % on Furniture. [add with operating expenses, add with accumulated
depreciation]
v. Provision for tax to be provided at 50% [deduct from income before income tax; add with
current liabilities]
vi. Wages expenses tk. 3500 included in the salary expenses. [deduct from salaries; add to
arrive cost of goods sold]
vii. The Director’s proposed 10% dividend. [deduct from retained earnings; add with current
liabilities]
Prepare: i) Multiple-Step Income Statement ii) Statement of Retained Earnings iii) Balance Sheet

PROBLEM-08
Akij Cement Company Ltd. Provide you the following information
Trial Balance
For the year ended 31st December 2015

Particulars Dr(Tk.) Cr.(Tk.) Particulars Dr.(Tk.) Cr.(Tk.)

Share capital 600000 Consumption of raw 900000
material
Share premium 360000 Bank overdraft 400000
Retained earnings 100000 Bank loan(Long Term) 300000
Preliminary expenses 200000 Accounts receivable 700000
Plant & Machinery 300000 Salaries expenses 200000
Accumulated dep. On plant 10000 Office administration 400000

Page 30 of 37
& Machinery expenses
Furniture 200000 Selling expenses 150000
Accumulated dep. On 10000 Acc. payable 415000
furniture
Motor car 30000 Income tax paid in advance 300000
Sales 2000000 Miscellaneous expenses in 40000
advance
Miscellaneous receipt 120000 Interim Dividend 60000
Stock (01/01/2015) 300000 Closing stock of Raw 500000
Materials
40,15,000 40,15,000

Additional information:
(i) Closing stock was valued at tk. 6,00,000
(ii) Preliminary expenses are to be written off
(iii)The bank loan was taken on 1st April, 2015 at 18% interest
(iv) Provide dep. At 10% on plant & machinery and furniture and 20% on motor car
(v) Provision for tax is to create for Tk. 3,00,000
(vi) Advertising expenses Tk. 50,000 included in the office administrative expenses
(vii) The director proposed 20% dividend on share capital.
Prepare:
i) Multiple-Step Income Statement ii) Statement of Retained Earnings iii) Balance Sheet

PROBLEM-09
Usha Limited, a company with an Authorized Capital of Tk. 8,00,000 divided in shares of Tk. 20
each, showed the following balances as on December 31, 2021

USHA LIMITED
Trial Balance
December 31, 2021
SL. No. Accounts Title Dr. Cr.

1. Share Capital (Tk. 20 par value) 400,000

2. Buildings 170,000
3. Rates and Taxes 5,400
4. Purchases 1,453,980
5. Sales 1,894,200
6. Accounts Receivable 174,480
7. Purchase Returns 5,520
8. Accounts Payable 122,400
9. Salaries 100,000
10. Bad Debts 7,300
Page 31 of 37
 11. Allowance for Doubtful Account 9,300
12. Interim Dividend Paid 20,000
13. Insurance Premium 2,920
14. Office Expenses 75,340
15. Furniture 14,000
16. Accumulated Depreciation-Furniture 7,000
17. General Reserve 70,000
18. Inventory 201,980
19. Cash at Bank 100,240
20. Wages 117,840
21. Motor Vehicles 150,000
22. Accu. Dep.-Motor Vehicles 50,000
23. Discounts 5,820 800
24. Profit and Loss A/c 40,080
Total 2,599,300 2,599,300
Additional Information
(i) Closing Inventory valued at Tk. 2,40,000, which does not include goods amount Tk.
24,000 destroyed by fire. Insurance Co. admitted the claim to the extent to Tk. 22,500.
(ii) Rates and Taxes cover 15 months to 31st March 2022 and the insurance was accrued Tk.
920.
(iii) General reserve to be raised by Tk. 30,000.
(iv) Depreciation on all types of tangible fixed assets @ 10% per annum.
(v) Total Dividend for this year 20% on paid up capital
Instruction
a) Prepare a Profit and Loss account for the period.
b) Prepare a Profit and Loss Appropriation Account for the period and
c) Prepare a Balance Sheet as on December 31, 2021
SOLUTION-09
USHA LIMITED
Profit and Loss Account
For the year ended December 31, 2021
Particulars Tk. Tk. Tk.
Sales 18,94,200
Less: Cost of goods sold
Beginning Inventory 2,01,980
Purchase 14,53,980
(-) Return 5,520
14,48,560
Cost of goods available for sales 16,50,540
(-) Closing Inventory 2,40,000
(-) Inventory destroyed by fire 24,000
13,86,540
(+) Wages 1,17,840
15,04,380
Gross Profit 3,89,920

Page 32 of 37
Less: Operating Expenses
Salaries 100,000
Rates and Taxes 5,400
(-) Advanced 1,080 4,320
Bad Debts 7,300
Insurance Premium 2,920
(+) Accrued 920 3,840
Office Expense 75,340
Discount 5,820
Lost by fire 24,000
(-) Admitted Claim 22,500 1,500
Depreciation Expenses:
Buildings 17,000
Furniture 1,400
Motor Vehicles 15,000
33,400
2,31,520
Operating income 1,58,400
Non-operating income and expenses
Discount received 800
Net Profit 159,200

USHA LIMITED
Profit and Loss Appropriation Account
For the year ended December 31, 2021
Tk. Tk.
Beginning retained earnings 40,800
Net profit 1,59,200
1,99,280
Less: Interim Dividend 20,000
Less: Dividend Payable 60,000 80,000
Less: General Reserve 30,000
1,10,000
Ending retained earnings 89,280

USHA LIMITED
Balance Sheet
December 31, 2021
Items Tk. Tk.
Assets
Fixed Assets:
Buildings 170,000
(-) Accumulated depreciation 17,000 153,000
Furniture 14,000
(-) Accumulated depreciation 8,400 5,600
Motor Vehicles 150,000
(-) Accumulated depreciation 65,000 85,000
Investments: 0.00
Current Assets:
Accounts Receivable 174,480

Page 33 of 37
 (-) Allowance for bad debts 9,300 165,180
Inventory 240,000
Due from Insurance Co. 22,500
Advance rates and taxes 1080
Cash at Bank 100,240
Total 772,600
Liabilities and Shareholders’ Equity Tk. Tk.
Share Capital:
Authorized Capital (40,000 shares @ Tk. 20) 800,000
Issued and Paid-up Capital (20,000 shares @ 20 each) 400,000
Reserve and Surplus:
General Reserve 70,000
(+) New 30,000 100,000
Retained earnings 89,280
Long-Term Loans: 0.00
Current Liabilities:
Accounts Payable 122,400
Accrued Insurance 920
Dividend Payable 60,000
183,320
Total 772,600
PROBLEM-10
The following is the trial balance of Sonali Ltd. As of December 31, 2021

SONALI LTD.
Trial Balance
December 31, 2021
SL Accounts Title Dr. Cr.
1 Share Capital (Tk. 10 par value) 100,000
2 Paid-in Capital in excess of par 5,000
3 General Reserve 25,000
4 Debenture, 8% Issued on July 1, 2013 50,000
5 Buildings and Accumulated Depreciation 110,000 30,000
6 Plant and Machinery and Accumulated Dep. 70,000 20,000
7 Investment 14,000
8 Preliminary Expenses 8,000
9 Cash in hand and at Bank 23,000
10 Inventory 64,000
11 A/R and A/P 35,000 15,000
12 Advance Income Tax 4,000
13 Purchases and Sales 125,000 204,000
14 Returns 2,000 3,000
15 Bad Debts and Allowance for Doubtful 2,300 800
16 Salaries 6,000

Page 34 of 37
 17 Printing and Stationary 700
18 Interest Expenses on Debenture 1,700
19 Insurance Expenses 1,200
20 Audit Fees 1,400
21 Interest Received 1,000
22 Profit and Loss A/c 14,500
Total 468,300 468,300

Additional Information
(i) Closing Inventory valued at Tk. 55,000, which includes goods amount Tk. 4,000
destroyed by fire. Insurance Co. admitted the claim to the extent to Tk. 2,500.
(ii) General reserve to be raised to Tk. 30,000.
(iii) Accrued salary was Tk. 1,000
(iv) Insurance was paid for twelve months on March 31, 2021
(v) Depreciation on Building and Machinery @ 12% per annum.
(vi) 25% Preliminary expenses should amortize this year
(vii) Dividend was declared 25% on Capital.
Instructions:
a. Prepare a profit and loss account for the period.
b. Prepare a Balance Sheet as on December 31, 2021

SOLUTION-10
SONALI LTD.
Profit and Loss statement
For the year ended December 31, 2021
Tk. Tk.
Sales 2,04,000
(-) Return 2,000
Net sales 2,02,000
Beginning Inventory 64,000
Purchase 1,25,000
(-) Return 3,000 122,000
Cost of goods available for sales 1,86,000
Closing Inventory excluding goods destroyed by fire 51,000
(-) Destroyed by fire 4,000 55,000
1,31,000
Gross Profit 71,000
Operating expenses:
Salaries 6,000
(+) Accrued 1,000 7,000
Insurance Premium 1,200
(-) Advanced 300 900
Bad Debts 2,300
Page 35 of 37
 Printing and Stationary 700
Interest on Debenture 1,700
(+) Accrued 300 2,000
Office Expense
Audit Fees 1,400
Lost by fire 4,000
(-) Admitted Claim 2,500 1,500
Depreciation Expenses:
Buildings 13,200
Machinery 8,400 21,600
Amortization-Pre. Exp. 2,000
Operating profit 31,600
Non-operating income
Interest received 1,000
Non-operating expenses
Net Profit 32,600
SONALI LTD.
Profit and Loss Appropriation Account
For the year ended December 31, 2021
Tk.
Beginning retained earnings 14,500
Add: Net profit 32,600

Dividend Payable (100,000x25%) 25,000

General Reserve (30,000-25,000) 5,000
30,000
Ending retained earnings 17,100

SONALI LTD.
Balance Sheet
December 31, 2021
Items Tk. Tk.
Assets
Fixed Assets:
Buildings 110,000
(-) Accu. Depreciation 43,200 66,800
Plant and Machinery 70,000
(-) Accu. Depreciation 28,400 41,600
Investments:
Investment 14,000
Current Assets:
Accounts Receivable 35,000
(-) Allowance for BD 800 34,200
Inventory 51,000
Due from Insurance Co. 2,500
Advance Income Tax 4,000
Page 36 of 37
Prepaid Insurance 300
Cash in hand and at Bank 23,000
Exp. not written off:
Preliminary Exp. 8,000
(-) Written off 2,000 6,000
Total Assets 243,400
Liabilities and shareholders’ equity Tk. Tk.
Share Capital:
Paid up Capital Tk. 10 Par 100,000
Paid-in Capital in excess par 5,000 105,000
Reserve and Surplus:
General Reserve 25,000
(+) New 5,000 30,000
Retained earnings 17,100
Long-Term Liabilities:
Debenture 8% 50,000
Current Liabilities:
Accounts Payable 15,000
Accrued Salary 1,000
Dividend Payable 25,000
Accrued Interest 300 41,300
Total liabilities and shareholders’ equity 243,400

Page 37 of 37