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 | |
| Assets | ||
| 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.