Answer:
Net Total Assets = Owner's Equity = $2,012,000
Step-by-step explanation:
Note: The requirement is to prepare the balance sheet of Mr. Tariq Mehmood as on 31st march, 2019.
This can be prepared as follows:
MR. TARIQ MEHMOOD
Balance sheet
As on 31st march, 2019
Particulars $ $
Intangible Assets
Good will 100,000
Investment 51,400
Total intangible assets 151,400
Fixed Assets
Building 1,700,000
Machinery 400,000
Total fixed assets 2,100,00
Current Assets
Cash in hand 80,600
Cash at bank 100,000
Debtors 200,000
Closing balance 100,000
Total current assets 480,600
Current Liabilities
Creditors (420,000)
Bills payable (280,000)
Expenses payable (20,000)
Negative working capital (239,400)
Net Total Assets 2,012,000
Financed by:
Capital 1,600,000
Drawings (34,000)
Net profit 446,000
Owner's Equity 2,012,000
Note:
As it can be seen in the balance sheet above, Net Total Assets is equal to Owner's Equity at $2,012,000 as required for a balance sheet in financial accounting. This shows that the balance sheet has been prepared accurately.
Also, the negative working capital indicates that Current Liabilities of Mr. Tariq is greater than his Current Assets. Therefore, Mr. Tariq does not have enough capital to run the day-to-day operations of his business. It also indicates that his business is being run efficiently and it is unable to cover its current debt adequately.