Chapter $12$ Balance Sheet and Statement of Profit and Loss

Problem $12\mathrm{.}14$

Preparation of Statements from tncomplete Information

Required

Which customer's loan request should be accepted and why? What additional information is required in making a decision? Assume that the year$-$end account balances are representative of the whole year.

The following information is available for Arogya Company:

AROGYA COMPANY

Assets

Balance Sheet, August $31,20$X$1$

Property, plant and equipment

Non$-$current investments $q,$

Inventories. $q,$

$2,400$

Trade receivables $q,$

Cash and cash equivalents $q,$

$?$

$?$

Other current assets. $q,$

$1,500$

Total assets $q,$

Equity and Liabilities $q,$

$\frac{600}{?}$

Equity

Equity share capital

Other equity. $q,$

$28,000$

Liabilities $q,$

$?$

$28,000$

$?$

Non$-$current liabilities

Long$-$term borrowings.

Other long$-$term liabilities. $q,$

$21,000$

Current liabilities $q,17,000$

Trade payables

Total equity and liabilities $q,q,$

$\frac{?}{?}$

AROGYA COMPANY

Statement of Profit and Loss

For the year ended August $31,20$X$1$

Net sales

Cost of goods sold $q,$

Gross profit $q,$

$,?q,$

Selling and administrative expenses

$\frac{33,000}{?}$

Profit before interest and tax. $q,$

Interest expense $q,$

$9,000$

$?$

Profit before tax $q,$

Income tax. $q,$

$?$

Profit after tax. $q,$

$?q,$

$\frac{?}{3,500}$

Additional information: $($a$)$ Profit margin, $7$ per cent; $($b$)$ Current ratio, $1\mathrm{.}3$; $($c$)$ Debt$-$to$-$equity, $1\mathrm{.}5$; $($d$)$ Inventory turnover, $2$ ; $($e$)$ Average collection period, $72$ days; $($ f $)$ Interest cover, $8$ times; and $($ g $)$ Return on assets, $3\mathrm{.}5$ per cent.

Required

Complete the financial statements of Arogya Company for $20$X$1.$ Show supporting calculations. Assume that the year$-$end account balances are representative of the whole year.