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Balance Sheet - Illustration
Indicate where the following items will be shown in the Balance Sheet.
(1) Credit balance in the bank column of the cash book
(2) Debit balance to the account of A who is a customer
(3) Credit balance in A/c of B who is supplier
(4) Debit balance in A/c of C who is a supplier
(5) Credit balance in A/c of D who is a customer
(6) Outstanding rent
(7) Insurance paid for the next year
(8) Loan from HDFC bank for 7 years
(9) Interest due on loan
(10) Provision for doubtful debtors
(11) Net Profit for the year
(12) Machinery
(13) Accumulated depreciation on vehicle
(14) Cash at Bangalore office
(15) Balance with Citi Bank
Solution:
(1) Credit balance in the bank column of cash book indicates a liability towards bank. This is actually a bank overdraft. Hence, it should be shown as Current Liability.
(2) Debit balance in A’s A/c means amount due from him as a customer. To be shown as Sundry Debtors.
(3) Credit balance in supplier’s A/c is a liability, hence will be shown under Current Liabilities.
(4) Debit balance in supplier’s A/c reflects an advance given to supplier, hence will be shown under Current Asset.
(5) Credit balance in customer’s A/c means advance from customer, hence will be shown as Current Liability.
(6) Outstanding rent will be shown under Current Liability.
(7) Insurance paid for next year is ‘prepaid’ for current year, hence will be taken as Current Asset.
(8) Loan from HDFC is for 7 years which is a long term loan, hence will be shown as Long Term Liability.
(9) Interest due on loan is Current Liability.
(10) Provision for doubtful debts will be reduced from the sundry debtor’s amount under Current Assets as it denotes chances of not receiving the money from customers.
(11) Net Profit for the year will be added to the Capital or to Reserves and Surplus in Balance Sheet.
(12) Machinery is a Fixed Asset.
(13) Accumulated depreciation on vehicle is reduction in its value, so will be shown as deduction from vehicle under Fixed Assets.
(14) Cash at Bangalore office is a Current Asset.
(15) Balance with Citi Bank is Current Asset. |
