FIN621 VU Assignment 1 Fall 2012 Solution

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AMBLER DIVERSIFICATION LIMITEDINCOME STATEMENT
ParticularsNoteAmount Rs.
Sales
Less: Cost of Goods Sold
17,000,000
5,700,000
Gross Profit11300000
Less: Administrative Expenses
Less: Selling Expenses
2,600,000
4,000,000
Operating Profit4,700,000
Other ExpensesNil
Earning Before Interest and Tax (EBIT)4,700,000
Income Tax (30%)1,410,000
Profit After Tax3,290,000
Please note that the one time occurance of an event and loss thereof cannot be shown on the income statement body as it has to show income and an accident which might have caused loss, is not part of the normal operation of the company that is why it will be separately shown (Fin621 Handout Page 38, special items). 


AMBLER DIVERSIFICATION LIMITEDSTATEMENT OF RETAINED EARNINGS
ParticularsNotesAmount Rs.
Retained Earnings for the year 201011,000,000
Overstatement due to Error745,000
Retained Earnings (correction of Error)10255000
Difference due new inventory accounting method(4,800,000)
Retained Earning at the start of 20115,455,000
Net Loss on Disposal of Assets(300,000)
Expenses on Clean Up Process(350,000)
Net Retained Earnings at the start of 20114,805,000
Income after Tax for 20113,290,000
Total Retained Earnings at the end of 2011 without payment of dividend8,095,000

AMBLER DIVERSIFICATION LIMITEDINCOME STATEMENT
ParticularsNoteAmount Rs.
Sales
Less: Cost of Goods Sold
17,000,000
5,700,000
Gross Profit11300000
Less: Administrative Expenses
Less: Selling Expenses
2,600,000
4,000,000
Operating Profit4,700,000
Other Expenses
loss on sale of asset 1,700,000 
profit before tax (EBT) 3,000,000 
pretax gains(gain on asset sale) 14,00,000
4,400,000
income tax(30%) 1,3,20,000
profit after tax 3,080,000
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