On a pilot basis a Government Department, PPO, is making its financial statements by using accrual basis. The information is given below:

The given balances appeared in the balance sheet of PPO at 31 March 2008.

                                                    Rs
Plant and equipment-cost           840,000
Accumulated depreciation           370,000

In the year ended 31 March 2009 the given transactions occur:

1) Plant which cost Rs 100,000 with a written down value of Rs 40,000 was sold for Rs 45,000 on 10 December.

2) New plant was purchased for Rs 180,000 on 1 October 2008.

It is the policy of the company to charge depreciation at 10 % per year on a straight line basis, with a proportionate charge in the year of acquisition and no charge in the year of sale. None of the plant was over 10 years old at 31 March 2008.

Required:

problem 1: Make the following ledger accounts to record such transactions for the period. A cash account is not necessary.

a) A Plant and Equipment Account                                        
b) A Depreciation Account                                                         
c) A Disposal Account

problem 2: At 31 March 2008, PPO had a provision for doubtful debts of Rs10,000, appearing as a balance on the bad and doubtful debts account.

At 31 March 2009 trade debtors amounted to Rs 280,000 and on reviewing the balances it was decided to prepare off debts totaling Rs 17,000 and to adjust the provision to 5% of the debtors.

Show the bad and doubtful debts account for the year 2009.

problem 3: Make extracts of Balance Sheet and Income Statement as at 31 March 2009 to show how the balances will be presented.

problem 4: Describe how such transactions would be accounted by using the cash basis.