Daksh had an ambition to start a business. After completing his studies, he surveyed the market for a business opportunity. He did a course in the production and marketing of handmade sheets. There after, he decided to start the business of producing handmade sheets, through which he would be recycling some of the waste material. On 1st April 2013, he started his business with a capital of 5,00,000 and borrowed 5,00,000 from his friend at an interest rate of 8% per annum.
He purchased premises for 4,00,000 and installed machinery valued at 1,00,000. Loose tools of 80,000, Furniture and Fixtures of 1,50,000 and a computer for ? 20,000 were also purchased. All the cash was kept in a bank and payments were made through the bank. The following is a summary of transactions:
Dye and Chemicals
Total Purchases R 3,95,000 (Cash) + 2,05,000 (Credit)]
Total Sales R 7,50,000 (Cash) + 2,50,000 (Credit)]
Wages
Electricity Expenses
Water Expenses
Cartage on Purchases
Cartage on Sales
10,000
2,40,000
18,000
12,000
24,000
30,000
Business premises were insured on 1st October, 2013, on a yearly premium of 24,000. Interest on loan was paid by cheque and a part of loan of 1,00,000 was also paid at the year end. On 31st March, 2014: () Closing stock valued at 2,48,000. (i) Wages of 20,000 were still outstanding. (iii) Depreciation was to be provided @ 10% per annum on machinery, loose tools and computer and @ 5% per annum on premises and furniture and fixtures, (iv) A debtor of 27,200 became insolvent and only 25 paisa in a rupee is expected to be realised from him.
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