Question

Abhishek was a good batsman of his school cricket team. His school team won
many trophies under his captaincy. He has an inclination towards cricket.
He decided to start a sports equipment factory manufacturing cricket equipments like
bats ,balls ,stumps etc. He realised that he alone cannot arrange the money required
to start the business , so he discussed the plan with his best friend Pranav. Pranav
took it as an opportunity and agreed to start the business with Abhishek from 1st July
2019 on the following conditions :
• The name of the firm will be “Friends Sports industry”.
• Abhishek and Pranav each will contribute ₹ 15 lakh as capital on 1st July
2019.
• Pranav allowed to use a portion of his house as office, for which he will be
paid ₹ 8000 per month on 10th day of next month.
• Abhishek will withdraw rupees 3,000 at the end of every month. Pranav will
withdraw ₹10000 at the end of every quarter.
• Interest on capital will be provided@ 10% per annum & interest on drawings
will be charged @ 6% per annum
• Profits and losses are to be shared in 3:2 irrespective of their capital
contribution.
• For other issues ,if any , provisions of Indian partnership Act 1932 will be
applicable.
On 3rd July, they opened a bank account with SBI in the firm’s name by
depositing ₹28 lakh, remaining amount was retained as cash in hand for meeting
day to day requirement.
On 1st August , two machines were purchased for ₹10 lakh and ₹ 600000 paid by
cheque. Installation charges were ₹50000 paid in cash.
On 15 July, they purchased furniture for ₹100000 and computer and printer for
₹40000 paid by cheque for office use.
On 30th September, two transport van were also purchased for ₹ 5 lakh each.
CGST and SGST is applicable @ 5% each and IGST @ 10% where ever
required as per the law.
GST is applicable with uniformity on all other items unless otherwise stated.
Following figures and details are extracted from the books of “Friends sports
industry” on 31st March 2020:
1. Total sales during the year amounted to rupees 6000000 [inter state
sales rupees 45 lakh and intrastate sales rupees 15 lakh] (credit salesbeing 20% of cash sales), 2.5 % commission is given to salesman and
cash discount @ 1% will be allowed. Out of the cash proceeds from
sales rupees 45 lakh deposited immediately into Bank.
2. Wages paid during the year rupees 120000 in cash.
3. Raw material purchased during the year rupees 50 lakh[interstate
purchase rupees 30 lakh and intrastate purchase rupees 20 lakh], 60% of
the total purchase were in cash and paid through cheque.
4. Electricity expenses rupees 30000 paid in cash.
5. Sales promotion expenses paid through cheque rupees 50000.
6. Factory rent rupees 40000 paid through cheque.
7. Insurance premium rupees 72000 paid through cheque on 1st December
2019
8. Consultancy charges rupees 3000 paid in cash.
9. General expenses rupees 1000 paid in cash.
10.Freight & Carriage inward rupees 5000[inter state rupees 4000 and intra
State rupees 1000] paid through cheque.
11.Telephone expenses rupees 8000 paid in cash
12.Paid rupees 1000 for trade permissions
13.Van maintenance expenses rupees 25000 paid in cash
14.On 30th September 2019 Pranav advanced a loan of rupees 200000 to
the firm.
15.Abhishek was in need of funds and hence took a loan of rupees 100000
from the firm on 1st July 2019, agreed rate of interest being 12% per
annum.
16.Goods costing rupees 5000 would distributed as free samples
17.On 31st March 2020 , One creditor claim of rupees 90000 was settled for
rupees 87000.
18.On 31st March 2020 , One debtor of rupees 30000 accepted a bill for 3
months. The bill was immediately discounted with the bank @ 6% per
annum.
19.During the year total collection from other debtor was rupees 850000
and cash paid to other creditors was rupees 15 lakh.
Journalize the above transactions

Answer 1

Answer:

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