Mr. Ali is running Hyper Star Traders a soleproprietorship business located at the Mall

Road, Lahore. At the year end the business has:

Furniture Rs. 40,000

Plant 200,000

Capital 280,000

On 30th November 2009 Mr. Ali submitted a tender for sale ofgoods of Rs. 20,000 which

is likely to be confirmed shortly. Bank debited service chargesRs. 150 and interest on

loan Rs. 500 and credited dividend for Rs. 2,000 in the month ofDecember (intimation

from bank was received on 7th January 2010). Mr. Ali alsoestimates that 5% of the

amount will not be collectable from sundry debtors. House rentallowance Rs. 5,000 has

been paid on 31st December from his personal account, on thesame date stock was

valued at Rs. 200,000 and plant Rs. 160,000 because of its wearand tear.

The following balances (in the books of Hyper Star Traders) arealso given along with

above information as on 31st December 2009:

ParticularsRs. Particulars Rs.

Opening stock120,000 Bankbalance 36,000

Sundry Debtors100,000 Bills payable 20,000

Long term Investments60,000 Returns outwards 4,800

Returns inwards8,000 Commission 2,000

Purchases680,000 Sales 924,000

Cash in hand4,000 Interest received 800

Bills receivable44,000 Sundry Creditors 160,000

Carriage out3,600 Salaries 48,000

Insurance paid2,800 Wages 45,200

Required:

A. Pass necessary adjusting entries.(15 marks)

B. Prepare the Income statement of Hyper Star Tradersfor the year ending on

31st December,2009. (15 marks)

C. Prepare the Balance sheet of Hyper Star Traders as on31st December, 2009.

(10 marks)