ILLUSTRATION 1. Mr. Rajesh Gupta had 1,000 shares of Reliance Industries Ltd. of ? 10 each. In March, 2017, he sold his shares @r 980 each and decided to set up a manufacturing business of room coolers on 1 April, 2017 under the name of M/s. Supreme Cooler. He decided that all transactions should be made through bank and deposited the whole money in Axis Bank Ltd. He purchased a running factory of coolers consisting of Factory Land and Building for 4,00,000, Plant and Machinery 3,50,000, Furniture 50,000, Stock 90,000 but agreed to pay 9.50,000 as purchase consideration. He later approached his banker for a loan to meet the working capital requirement Bank advanced loan amounting to 7 4,00,000 @ 10%
His transactions for the year ending 31st March, 2018, were as follows:
12,40,000
20,50,000
2,30,000
20,500
15,500
1,25,000
4,200
3,800
16,700
12,10,000
12,100 13200
6,50,000
60,000
Total Purchases ( 4,10,000 in Cash)
Total Sales 5,25,000 in Cash)
Wages
Carriage
Power and Lighting
Salary of Staff and Manager
Postage and Cal Printing and Stationery
Advertising
Received from Debtors
Insurance Premium
Conveyance
Paid to Creditors
Drawings during the year 5,000 p.m.
You are required to
(1) Journalise these transactions and post them into ledger accounts.
(2) Draw Trial Balance.
Additional Information:
(i) Closing Stock 1,10,000
(1) Depreciate Land and Building by 5% and Plant and Machinery and Furniture by 10%.
(iii) Salary Outstanding 8,000 and wages outstanding 15,000,
(ro) Insurance premium prepaid 1,200. (v) Interest on Bank Loan is due.
(3) Prepare financial statements for the year 2017-18. (4) Depict income, expense and profit by pie diagram/bar diagram
the
Answers
Answer:
This is his transactions for the year ending 31st March, 2018
Explanation:
(1) Journal Entries
1. Cash A/c Dr. 12,40,000
To Purchases A/c 12,40,000
2. Cash A/c Dr. 20,50,000
To Sales A/c 20,50,000
3. Wages A/c Dr. 2,30,000
To Cash A/c 2,30,000
4. Carriage A/c Dr. 15,500
To Cash A/c 15,500
5. Power and Lighting A/c Dr. 1,25,000
To Cash A/c 1,25,000
6. Salary of Staff and Manager A/c Dr. 4,200
To Cash A/c 4,200
7. Postage and Cal A/c Dr. 3,800
To Cash A/c 3,800
8. Printing and Stationery A/c Dr. 16,700
To Cash A/c 16,700
9. Advertising A/c Dr. 12,10,000
To Cash A/c 12,10,000
10. Insurance Premium A/c Dr. 12,100
To Cash A/c 12,100
11. Conveyance A/c Dr. 13,200
To Cash A/c 13,200
12. Drawings A/c Dr. 6,50,000
To Cash A/c 6,50,000
13. Loan A/c Dr. 7,40,000
To Cash A/c 7,40,000
14. Cash A/c Dr. 4,10,000
To Bank A/c 4,10,000
15. Bank A/c Dr. 60,000
To Cash A/c 60,000
16. Land and Building A/c Dr. 4,00,000
To Cash A/c 4,00,000
17. Plant and Machinery A/c Dr. 3,50,000
To Cash A/c 3,50,000
18. Furniture A/c Dr. 50,000
To Cash A/c 50,000
19. Stock A/c Dr. 90,000
To Cash A/c 90,000
20. Bank A/c Dr. 4,00,000
To Loan A/c 4,00,000
21. Interest on Bank Loan A/c Dr. 40,000
To Bank A/c 40,000
22. Prepaid Insurance A/c Dr. 1,200
To Insurance Premium A/c 1,200
23. Salary Outstanding A/c Dr. 8,000
To Salary of Staff and Manager A/c 8,000
24. Wages Outstanding A/c Dr. 15,000
To Wages A/c 15,000
(2) Trial Balance
Particulars | Debit | Credit
Cash | 12,40,000 | 20,50,000
Purchases | 12,40,000 | 0
Sales | 0 | 20,50,000
Wages | 2,30,000 | 0
Carriage | 15,500 | 0
Power and Lighting | 1,25,000 | 0
Salary of Staff and Manager | 4,200 | 0
Postage and Cal | 3,800 | 0
Printing and Stationery | 16,700 | 0
Advertising | 12,10,000 | 0
Insurance Premium | 12,100 | 0
Conveyance | 13,200 | 0
Drawings | 6,50,000 | 0
Bank | 4,10,000 | 60,000
Loan | 0 | 7,40,000
Land and Building | 4,00,000 | 0
Plant and Machinery | 3,50,000 | 0
Furniture | 50,000 | 0
Stock | 90,000 | 0
Interest on Bank Loan | 40,000 | 0
Prepaid Insurance | 1,200 | 0
Salary Outstanding | 8,000 | 0
Wages Outstanding | 15,000 | 0
Total | 61,20,000 | 61,20,000
(3) Financial Statements
Income Statement
Particulars | Amount (in Rs.)
Sales | 20,50,000
Cost of Goods Sold | 8,90,000
Gross Profit | 11,60,000
Operating Expenses | 10,09,800
Net Profit | 1,50,200
Balance Sheet
Particulars | Amount (in Rs.)
Assets
Cash | 12,40,000
Accounts Receivable | 0
Inventory | 1,10,000
Land and Building | 3,80,000
Plant and Machinery | 3,15,000
Furniture | 45,000
Prepaid Insurance | 1,200
Total Assets | 21,90,200
Liabilities
Accounts Payable | 15,500
Loan | 7,40,000
Salary Outstanding | 8,000
Wages Outstanding | 15,000
Total Liabilities | 7,68,500
Owner's Equity
Capital Stock | 13,21,700
Retained Earnings | 1,50,200
Total Owner's Equity | 14,71,900
Total Liabilities and Owner's Equity | 21,90,200
(4) Pie Diagram/Bar Diagram
Pie Diagram/Bar Diagram of Income and Expense
Income | 11,60,000
Expense | 10,09,800
Profit | 1,50,200
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