Hyperactive Ltd. purchased an agency to deal in sports equipment on April 1st 2013. On 31/3/2014 the companys balance sheet appears as follows:

Assets

Current Assets

Cash 2,000,000

Acc. Rec. 4,000,000

ADD 200,000 3,800,000

Inventory 5,000,000

Investments

12% Bank Deposit 100,000

Long Term Assets

Showroom (life 20 years) 5,000,000

Accumulated Depreciation 250,000 4,750,000

15,650,000

Liabilities +O.E.

Current Liabilities

Acc. Payables 3,000,000

Dividends Payable 100,000

Long Term Liabilities

5% Loan Payable 4,000,000

Owners Equity

Common Stock 5,000,000

Reserves and Surplus 3,550,000

15,650,000

Additional information related to the companys business transactions for the year ended 31-3-2015 is given below:

1. The company sold goods worth 6000,000. Out of these 80% were for credit and the rest were for cash. Additionally, on 1/2/2015, we received cash advance worth 1000,000 from a customer for certain sports equipment to be delivered in equal installments over the next 10 months.

2. We collected 7,000,000 from our customers. Bad debts written off during the year amounted to 210,000 and 40,000 worth of bad debts that were previously written off were recovered during the year. The company maintains an ADD balance equal to 5% of ending balance of Accounts Receivables.

3. The company purchased inventory of sports goods worth 3000,000 on credit. It paid 5000,000 to its suppliers. The total value of inventory leaving the business (inventory sold) amounted to 4000,000.

4. One 1/7/2014, the company purchased land worth 1000,000. Half the land was purchased for cash and half of it was purchased through a 4% loan. On 1/4/2014 we purchased equipment worth 200,000. The equipment had a useful life of 10 years. We did not like the equipment so on 31/12/2014 we sold it off for 190,000.

5. Total salaries paid amounted to 500,000. Salaries worth 50,000 for the month of March 2015 were not yet paid. In 2015, Hyperactive invested 200,000 in the shares of another company and received dividend worth 20,000.

6. Dividends from previous year were paid off during the year. The investments of the company carried an interest rate of 12% and all the interest due was not received during the year. The interest on all loans was paid in cash.

Prepare the Balance Sheet and Income Statement for the year ended 31-3-2015

Please highlight anything that you feel is incorrectly stated in the balance sheet as on 31-3-2014. Please state any assumptions used for preparing income statement and balance sheet for 31-3-2015.