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Finacial Accounts

MGT 278C Assignment 1

NNS Hospitals Ltd. is a publicly owned company which owns a chain of hospitals. The Balance Sheet of NNS as of 31/3/2015 is given below:

Liabilities and Owners’ Equity    
Accounts Payable   120,000
Salaries Payable   10,000
Provision for Taxes (2013-14)   90,000
Provision for Taxes (2014-15)   100,000
8% Bank Loan   160,000
Share Capital   400,000
Share Premium   200,000
Retained Earnings   20,000
TOTAL   1,100,000
Cash   80,000
Inventories of Medical Supplies   120,000
Accounts Receivable 100,000  
Less: Allowance for Doubtful Debts -5,000 95,000
Advance Taxes Paid (2013-14)   95,000
Advance Taxes Paid (2014-15)   100,000
Prepaid Insurance   20,000
Investments in 10% Government Bonds   200,000
Land   150,000
Building 200,000  
Less: Accumulated Depreciation -20,000 180,000
Equipment 100,000  
Less: Accumulated Depreciation -40,000 60,000
TOTAL   1,100,000


Majority of the cash payments and receipts made during the year are given below:

Cash Receipts   Cash Payments  
Total Cash Collected from Patients 700,000 Cash Paid for Staff Salaries 110,000
Interest Received on Govt. Bonds 20,000 Cash Paid for Accounts Payable 300,000
Sale of Equipment (31/12/2015) 15,000 Cash Paid for Utilities 50,000
Dividends received 5,000 Loan Repaid (31/3/2016) 20,000
    Doctors Honorarium 140,000
    Equipment Purchase (30/9/2015) 30,000
    Advance Tax Paid 100,000
    Dividends paid 50,000
    Investment in Stock of ND Co. 20,000


Additional Details:

1. NNS provides services to certain patients on a credit basis. During the current financial year, $300,000 worth of services was provided to such patients on a credit basis and $310,000 was collected from such patients. Due to poor financial condition of certain patients, $6,000 was written-off as bad debts in March 2016. $2,000 worth of previously written-off amounts was collected in January 2016. The firm wishes to maintain a balance of 5% of year-end Accounts Receivable as an allowance for doubtful debts.


2. NNS purchases all inventory of medical supplies on credit. The total purchase in the current financial year amounted to $250,000. The ending balance of inventory of medical supplies was $90,000.


3. The interest on 8% Bank Loan is accrued, but due to a computer glitch, could not be paid till 10th April 2016. The company had to pay a penalty of $10,000 along with the interest on 10th April 2016 for late payment of interest. The penalty becomes due in the year of default.


4. The equipment has a useful life of 5 years and Building has a useful life of 10 years. The equipment that was sold on 31/12/2015 was two years old at the beginning of the year and had a historical cost of $20,000.


5. Salaries for the last two weeks of March 2015 will be paid on 5th April 2016. Such salaries amounted to $15,000. Salaries payable for previous years were paid off in the current year.


6. The prepaid insurance is valid for another 15 months starting from 1/4/2015.


7. Tax assessment for the years 2013-14 and 2014-15 was completed in the current year and the tax was assessed to be Rs. 100,000 for 2013-14 and 95,000 for 2014-15. Shortfall (refund), if any, was paid (received) during the year 2015-16. Provision for taxes for the current year is 25% of Profit before Tax.


8. 10,000 new shares were issued. The face value of shares was $1 and Market value was $20.


Based on the above information, prepare the Balance Sheet, Income Statement, and Cash Flow Statement (Use Indirect Method) for the year ended on 31/3/2016.