Question: Following Balance Sheet of M/SCombined Industries relates to the year ended

December 31,2000.

Assets Rs. Liabilities&Equity Rs.

Cash 200,000 AccruedExpenses 25,000

AccountsReceivable 650,000 LoanPayable 200,000

Inventory 800,000 AccountsPayable 650,000

Un-expiredInsurance 40,000 Capitalstock 1,000,000

Plant &Equipment 1,150,000 Surplus 965,000

2,840,000 2,840,000

Additionalinformation:

1. Possibility of bad debts on Accounts Receivablehas not been considered yet. It is

estimated that baddebts will Rs. 20,000.

2. Rs. 150,000 representing cost of large scalenewspaper. Advertising campaign to

be completed in year2000 has been included in the inventories. It is alsofound

that inventoriesinclude merchandise Rs. 65,000 received on December 31,2000

has not been recordedas purchases.

3. Un-expired insurance consists of Rs. 4,000. Thecost of fire insurance for the year

2000 is Rs. 31,000includes the cash surrender value of officer lifeinsurance

policy.

4. Books show that plant & equipment has a costof Rs. 2,000,000 with

depreciation of Rs. 850,000 recognized in prior years.However, the balances

include fullydepreciated equipment of Rs. 150,000 that has been scraped andis

no longer inhand.

5. Accrued expenses ofRs. 25,000 represent accrued salaries of Rs. 35,000 lessnon

current advances ofRs. 10,000 made to company officials.

6. Loan payablerepresents a loan from bank that is payable in regularquarterly

installments of Rs.20,000. Interest of Rs. 2,000 accrued on the loan onDecember

31, 2000 has beenrecorded in the books.

7. Tax liability not shown is estimated at Rs.45,000.

8. Capital stock had been issued for a totalconsideration of Rs. 1,850,000 the

amount received is in excess of par and statedvalues of the stock being reported

as surplus. Capital stock represents 100,000shares of Rs. 10 each.

Required:

By considering IAS (1) Presentation of FinancialStatements, you are required to

prepare corrected Balance Sheet with accountsproperly classified.