Cash A/c

Particulars $ Particulars $ Particulars

Opening Balance 118,440.00 Manufacturing Plant a 144,000.00 Opening Balance
Accounts Receivable 2,604,000.00 WIP (Manufacturing La 492,000.00 Cash A/c
Notes Payable A/c 264,000.00 WIP (Indirect Manufac 198,000.00 Cash A/c
WIP (Social Security Ta 49,200.00 Cash A/c
WIP (Power, Heat) 135,600.00 Cash A/c
Prepaid Taxes and Insu 78,000.00 Depreciation A/c
Selling and Administra 522,000.00 Supplies A/c
Interest on Loan A/c 38,400.00 Material A/c
Accounts Payable A/c 788,400.00 Cash A/c
Dividend Expense A/c ( 36,000.00
WIP (Income Tax Expen 52,200.00
Income Tax Expense A/ 9,000.00
Notes Payable A/c (B/f 293,640.00
Closing Balance 150,000.00
2,986,440.00 2,986,440.00

Accounts Receivable A/c

Particulars $ Particulars $ Particulars
Opening Balance 311,760.00 Cash A/c 2,604,000.00 Opening Balance
Sales Revenue A/c 2,562,000.00 Sales Discount 49,200.00 Accounts Payable A/c
Closing Balance 220,560.00
2,873,760.00 2,873,760.00

Accounts Payable A/c

Particulars $ Particulars $ Particulars
Cash A/c 788,400.00 Opening Balance 185,760.00 Transfer to I/S
Closing Balance 288,360.00 Supplies A/c 66,000.00
Material A/c 825,000.00
1,076,760.00 1,076,760.00

Materials A/c
Particulars $ Particulars $ Particulars
Opening Balance 110,520.00 WIP A/c 811,000.00 Finished Goods
Accounts Payable A/c 825,000.00 Closing Balance 124,520.00
935,520.00 935,520.00

Sales Return Expense A/c

Particulars $ Particulars $ Particulars
Sales Return Allowanc 19,200.00 Transfer to I/S 19,200.00 Closing Balance
19,200.00 19,200.00

Finished Goods A/c

Particulars $ Particulars $ Particulars
Opening Balance 257,040.00 Cost of Goods Sold 1,806,624.00 Closing Balance
WIP A/c 1,901,952.00 Closing Balance 352,368.00

2,158,992.00 2,158,992.00

Notes Payable A/c

Particulars $ Particulars $ Particulars
Cash A/c 293,640.00 Opening Balance 288,840.00 Opening Balance
Closing Balance 259,200.00 Cash A/c 264,000.00 Cash A/c

552,840.00 552,840.00

Browning Manufacturing Company

Projected Balance Sheet as on 31st Dec 2010
Particulars $
Assets :
Current Assets
Cash and Marketable Securities
Accounts Receivable (Net of Allowance for DD)
Inventories
Materials 124,520.00
WIP 209,848.00
Finished Goods 352,368.00
Supplies 22,080.00
Prepaid Taxes and Insurance
Total Current Assets

Other Assets
Manufacturing Plant at Cost 2,822,400.00
Less: Accumulated Depreciation -1,047,600.00
Total Assets

Liabilities and Shareholder's Equity :

Current Liabilities
Accounts Payable 288,360.00
Notes Payable 259,200.00
Income Tax Payable 5,800.00
Total Current Liabilities
 Shareholder's Equity
Capital Stock 1,512,000.00
Retained Earning 862,136.00
Total Liabilities and shareholder's Equity

Browning Manufacturing Company

Projected Income Statement, 2010
Particulars $
Sales
Less: Sales Return 19,200.00
Less: Sales Discount 49,200.00
Net Sales
Less: Cost of Goods Sold 1,806,624.00
Gross Margin
Less: Selling and Administrative Expense 522,000.00
Operating Income
Less: Interest Expense 38,400.00
Profit Before Tax
Less: Estimated Federal Tax Expense 58,000.00
Profit After Tax (Tranfer to Retained Earnings)
Dividend Issued

Question 3.
Management will not be able to to achieve its note payable repayment goal while maintaining a cash balance of $15

Question 4.
Inventory Turnover ratio 2009 was 2.88 times and in 2010 it declined to 2.55 times indicating that the inventory turn

Question 5.
Company's Trade Creditors rose from previous year indicating a higher liability, more payment needs to be done if th
 WIP A/c
Particulars $ Particulars $
Opening Balance 172,200.00 Transfer to Finished Goods 1,901,952.00
Cash A/c 492,000.00 Closing Balance 209,848.00
Cash A/c 198,000.00
Cash A/c 49,200.00
Cash A/c 135,600.00
Depreciation A/c 140,400.00
Supplies A/c 61,200.00
Material A/c 811,000.00
Cash A/c 52,200.00

2,111,800.00 2,111,800.00

Supplies A/c
Particulars $ Particulars $
Opening Balance 17,280.00 WIP A/c 61,200.00
Accounts Payable A/c 66,000.00 Closing Balance 22,080.00

83,280.00 83,280.00

Sales Revenue A/c

Particulars $ Particulars $
Transfer to I/S 2,562,000.00 Accounts Receivable A/c 2,562,000.00

2,562,000.00 2,562,000.00

Cost of Goods Sold A/c

Particulars $ Particulars $
Finished Goods 1,806,624.00 Transfer to I/S 1,806,624.00

1,806,624.00 1,806,624.00

Sales Return Allowance A/c

Particulars $ Particulars $
Closing Balance 19,200.00 Sales Return Expense A/c 19,200.00
19,200.00 19,200.00

Sales Discount (Cash) A/c

Particulars $ Particulars $
Closing Balance 49,200.00 Accounts Receivable A/c 49,200.00
49,200.00 49,200.00

Manufacturing Plant A/c

Particulars $ Particulars $
Opening Balance 2,678,400.00
Cash A/c 144,000.00 Closing Balance 2,822,400.00

2,822,400.00 2,822,400.00

0
$ $

150,000.00
201,360.00

124,520.00
209,848.00
352,368.00
22,080.00 708,816.00
92,520.00
1,152,696.00

2,822,400.00
-1,047,600.00 1,774,800.00
2,927,496.00

288,360.00
259,200.00
5,800.00
553,360.00
 1,512,000.00
862,136.00 2,374,136.00
2,927,496.00

$ $
2,562,000.00
19,200.00
49,200.00
2,493,600.00
1,806,624.00
686,976.00
522,000.00
164,976.00
38,400.00
126,576.00
58,000.00
68,576.00
36,000.00

ng a cash balance of $150000.

g that the inventory turnover goal set by the management was not fulfilled.

nt needs to be done if the previous level needs to be achieved.

Bharat Petroleum Corporation Limited:

Inventories (FIFO Method)

Inventories are stated at cost or net realisable value, whichever is lower. Cost of inventories comprises of expend
course of business in bringing inventories to their present location including appropriate overheads apportioned
basis and are determined on the following basis:
- Crude oil, traded goods and finished products other than lubricants are determined on First in First out basis.
- Other raw materials, packages, lubricants and stores and spares are determined on weighted average basis.
- The cost of Stock-in-Process is determined at raw material cost plus cost of conversion.

-Customs duty on Raw materials/Finished goods lying in bonded warehouse are provided for at the applicable rat
duty is transferred to consignee.
-Excise duty on finished stocks lying at manufacturing locations is provided for at the assessable value applicable
end use. 1.10.4. -The net realisable value of finished goods and stock in trade are based on the inter-company tra
prices (applicable at the location of stock) for sale to oil marketing companies and retail consumers respectively. F
valuation, the proportion of sales to oil marketing companies and retail consumers are determined on all India ba
valuation at all locations.
-Raw Materials held for use in the production of finished goods are not written down below cost except in cases w
declined and it is estimated that the cost of the finished goods will exceed their net realisable value.
-Obsolete, slow moving, surplus and defective stocks are identified at the time of physical verification of stocks an
made for such stocks.
Revenue Recognition (Sales Method)
Sale of goods Revenue from the sale of goods is recognised when the significant risks and rewards of ownership o
buyer, the Corporation retains neither continuing managerial involvement to the degree usually associated with o
over the goods sold, revenue and the associated costs can be estimated reliably and it is probable that economic
transaction will flow to the Corporation.
Revenue from the sale of goods includes excise duty and is measured at the fair value of the consideration receiv
fair value allocations related to multiple deliverable and/or linked arrangements), net of returns, taxes or duties c
Government and applicable trade discounts or rebates.
Revenue is allocated between loyalty programmes and other components of the sale. The amount allocated to th
and is recognised as revenue when the Corporation has fulfilled its obligation to supply the products under the te
is no longer probable that the points under the programme will be redeemed.
Where the Corporation acts as an agent on behalf of a third party, the associated income is recognised on a net b
-Claims in respect of subsidy on LPG and SKO, from Government of India are booked on in principle acceptance th
instructions / clarifications, subject to final adjustments as stipulated.
-Construction contracts Revenue from Construction contracts arise from the service concession arrangements en
certain arrangements involving construction of specific assets as part of multiple deliverable arrangements. 182 B
Limited Contract revenue includes the amount agreed in the contract to the extent that it is probable that they w
measured reliably. If the outcome of the construction contract can be estimated reliably, then contract revenue is
and Loss in proportion to the stage of completion of the contract. The stage of completion is assessed with refere
cost incurred as compared to the total estimated cost of the related contract. Otherwise contract revenue is reco
contract costs incurred that are likely to be recoverable. Contract expenses are recognised as incurred unless they
contract activity. An expected loss on a contract is recognised immediately in the Statement of Profit and Loss.
-Interest income is recognised using effective interest rate (EIR) method.
-Dividend is recognised when right to receive the payment is established, it is probable that the economic benefit
will flow to the entity and the amount of dividend can be measured reliably.
-Income from sale of scrap is accounted for on realisation.
-Claims other than subsidy claims on LPG and SKO from Government of India are booked when there is a reasona
entories comprises of expenditure incurred in the normal
riate overheads apportioned on a reasonable and consistent
d on First in First out basis.
n weighted average basis.
sion.

vided for at the applicable rates except where liability to pay

e assessable value applicable at each of the locations based on

ased on the inter-company transfer prices and final selling
etail consumers respectively. For the purpose of stock
are determined on all India basis and considered for stock
n below cost except in cases where raw material prices have
realisable value.
hysical verification of stocks and where necessary, provision is

ks and rewards of ownership of the goods have passed to the

gree usually associated with ownership nor effective control
d it is probable that economic benefits associated with the

ue of the consideration received or receivable (after including

et of returns, taxes or duties collected on behalf of the

e. The amount allocated to the loyalty programme is deferred,

pply the products under the terms of the programme or when it

come is recognised on a net basis.

d on in principle acceptance thereof on the basis of available

concession arrangements entered into by the Corporation and

liverable arrangements. 182 Bharat Petroleum Corporation
that it is probable that they will result in revenue and can be
ably, then contract revenue is recognised in Statement of Profit
pletion is assessed with reference to the proportion of actual
wise contract revenue is recognised only to the extent of
gnised as incurred unless they create an asset relating to future
atement of Profit and Loss.

ble that the economic benefits associated with the dividend

oked when there is a reasonable certainty of recovery