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In the books of

..

JOURNAL ENTRY
DATE 2009 9-Aug PARTICULARS Cash A/c Building A/c To Capital A/c (Being Cash and Building brought as capital) Bank A/c To Bank Loan A/c (Being Bank loan taken) Bank A/c To Cash A/c (Being cash deposited into bank) Computer A/c To Computer Company A/c (Being Computer purchased ) Dr. Dr. L/F AMOUNT (RS) 300000 200000 AMOUNT (RS)

5000000

9-Aug

Dr.

350000 350000

9-Aug

Dr.

250000 250000

9-Aug

Dr.

500000
500000

9-Aug

Computer Company A/c To Bank A/c (Being paid to computer company)

Dr.

450000 450000

9-Aug

Dr. Electrical Connection A/c To Bank A/c (Being money paid as electric connection)

2000 2000

9-Aug

Bsnl Internet connection A/c To Bank A/c (Being money paid as BSNL connection)

Dr.

150000 150000

9-Aug

Furniture A/c To Samrat Furniture A/c (Being Furniture purchased)

Dr.

20000 20000

B/F

2222000

2222000

9-Aug

Advertisement A/c To Bank A/c (Being Advertisement expense paid)

Dr.

5000 5000

2010 31-Mar

Bank A/c To Sales A/c (Being Sales money deposited in bank)

Dr.

550000 550000

31-Mar

Dr. Purchased A/c To Bank A/c (Being Goods Purchased and payment made)

75000 75000

31-Mar

Electricity Charges A/c To Bank (Being electricity charges paid)

Dr.

135000 135000

31-Mar

Telephone Charge A/c To Bank A/c (Being Telephone charges paid.)

Dr.

45000 45000

31-Mar

Petty Expenses A/c To Bank A/c (Being Petty expenses charged paid)

Dr.

15000 15000

31-Mar

Entertainment Charges A/c To Bank A/c (Being Entertainment charges paid)

Dr.

12000 12000

31-Mar

Maintenance Expenses A/c To Bank A/c (Being Maintenance charges paid)

Dr.

9500 9500

B/F

3068500

3068500

31-Mar

Dr. Staff Salary A/c To Bank A/c (Being Staff Salary 800x8 for August 2009 to March 2010)

6400 6400

31-Mar

Dr. Drawing A/c To Bank A/c (Being Cash withdrawn for personal use 5000x8)

40000 40000

31-Mar

Bank Loan A/c

Dr.

100000 50000 150000

Interest on loan A/c Dr. To Bank A/c (Being Bank loan amount and interest paid)

31-Mar

Dr. Depreciation A/c To Computer A/c To Furniture A/c To Building A/c (Being Depreciation charged on fixed assets) TOTAL

117000 100000 3000 7000 3381900 3381900

DATE 1.08.09

PARTICULARS To Capital A/c

In the books of . Ledger Account Cash Account J/F AMOUNT DATE PARTICULARS 300000 1.08.09 By Bank A/c 31.03.10 By Balance c/d 300000

J/F

Cr. AMOUNT 250000 50000 300000

DATE 1.08.09

PARTICULARS To Capital A/c

Building Account J/F AMOUNT DATE PARTICULARS 200000 31.03.10 By Depreciation A/c 31.03.10 By Balance c/d 200000 Capital Account J/F AMOUNT DATE 500000 1.08.09 1.08.09 500000 Bank Loan Account J/F AMOUNT DATE 100000 1.08.09 250000 350000

J/F

Cr. AMOUNT 14000 186000 200000 Cr. AMOUNT 300000 200000 500000 Cr. AMOUNT 350000 350000 Cr. AMOUNT 100000 400000 500000 Cr. AMOUNT 500000 500000 Cr. AMOUNT 2000 2000

DATE PARTICULARS 31.03.10 To Balance A/c

PARTICULARS By Cash A/c By Building A/c

J/F

DATE PARTICULARS 31.03.10 To Bank A/c 31.03.10 To Balance c/d

PARTICULARS By Bank A/c

J/F

DATE 1.08.09

PARTICULARS To Computer company A/c

Computer A/c J/F AMOUNT DATE PARTICULARS 500000 31.03.10 By Depreciation A/c 31.03.10 By Balance c/d 500000 Computer Company Account J/F AMOUNT DATE PARTICULARS 450000 1.08.09 By Computer A/c 50000 500000 Deposit for Electricity connection J/F AMOUNT DATE PARTICULARS 2000 31.03.10 By balance c/d 2000

J/F

DATE PARTICULARS 1.08.09 To Bank A/c 31.03.10 To balance c/d

J/F

DATE 1.08.09

PARTICULARS To Bank A/c

J/F

DATE 1.08.09

PARTICULARS To Bank A/c

Bsnl Internet connection J/F AMOUNT DATE PARTICULARS 150000 31.03.10 By balance c/d 150000 Furniture A/c J/F AMOUNT DATE PARTICULARS 20000 31.03.10 By Depreciation A/c 31.03.10 By balance c/d 20000 Samrat Furniture A/c J/F AMOUNT DATE 20000 1.08.09 20000

J/F

Cr. AMOUNT 150000 150000 Cr. AMOUNT 3000 17000 20000 Cr. AMOUNT 20000 20000

DATE 1.08.09

PARTICULARS To Samrat Furniture A/c

J/F

DATE PARTICULARS 31.03.10 To balance c/d

PARTICULARS By Furniture A/c

J/F

DATE 1.08.09

PARTICULARS To Bank A/c

Advertisement Expense A/c J/F AMOUNT DATE 5000 31.3.10 5000

PARTICULARS By Profit & Loss A/c

J/F

Cr. AMOUNT 5000 5000

DATE 31.3.10

PARTICULARS To Profit & Loss A/c

Sales A/c Dr. J/F AMOUNT DATE 550000 31.3.10 550000

PARTICULARS By Bank A/c

J/F

Cr. AMOUNT 550000 550000

DATE 31.3.10

PARTICULARS To Bank A/c

Purchase A/c Dr. J/F AMOUNT DATE 75000 31.3.10 75000

PARTICULARS By Profit & Loss A/c

J/F

Cr. AMOUNT 75000 75000

DATE 31.3.10

PARTICULARS To Bank A/c

Electricity Charges A/c J/F AMOUNT DATE 135000 31.3.10 135000

PARTICULARS By Profit & Loss A/c

J/F

Cr. AMOUNT 135000 135000

DATE 31.3.10

PARTICULARS To Bank A/c

Telephone Charges A/c J/F AMOUNT DATE 45000 31.3.10 45000

PARTICULARS By Profit & Loss A/c

J/F

Cr. AMOUNT 45000 45000

DATE 31.3.10

PARTICULARS To Bank A/c

Petty Expense Charges A/c J/F AMOUNT DATE 15000 31.3.10 15000

PARTICULARS By Profit & Loss A/c

J/F

Cr. AMOUNT 15000 15000

DATE 31.3.10

PARTICULARS To Bank A/c

Entertainment Expense A/c J/F AMOUNT DATE 12000 31.3.10 12000

PARTICULARS By Profit & Loss A/c

J/F

Cr. AMOUNT 12000 12000

DATE 31.3.10

PARTICULARS To Bank A/c

Maintenance Charges A/c J/F AMOUNT DATE 9500 31.3.10 9500

PARTICULARS By Profit & Loss A/c

J/F

Cr. AMOUNT 9500 9500

DATE 31.3.10

PARTICULARS To Bank A/c

Staff Salary A/c J/F AMOUNT DATE 6400 31.3.10 6400

PARTICULARS By Profit & Loss A/c

J/F

Cr. AMOUNT 6400 6400

DATE 31.3.10

PARTICULARS To Bank A/c

Drawings A/c J/F AMOUNT DATE 40000 31.3.10 40000

PARTICULARS By Profit & Loss A/c

J/F

Cr. AMOUNT 40000 40000

DATE 31.3.10

PARTICULARS To Bank A/c

Interest on loan A/c J/F AMOUNT DATE 50000 31.3.10 50000

PARTICULARS By Profit & Loss A/c

J/F

Cr. AMOUNT 50000 50000

DATE 31.3.10 31.3.10 31.3.10

PARTICULARS To Computer A/c To Furniture A/c To Building A/c

Depreciation A/c J/F AMOUNT DATE 100000 31.3.10 3000 117000

PARTICULARS By Profit & Loss A/c

J/F

Cr. AMOUNT 117000

117000

DATE 1.08.09 1.08.10 31.3.10

PARTICULARS To Bank Loan A/c To Cash A/c To Sales A/c

Bank A/cDr. J/F AMOUNT DATE 350000 31.3.10 250000 31.3.10 550000 31.3.10 31.3.10 31.3.10 31.3.10 31.3.10 31.3.10 31.3.10 31.3.10 31.3.10 31.3.10 31.3.10 31.3.10 31.3.10 31.3.10 1150000

PARTICULARS By Computer Com A/c By Deposit for Electricity A/c By Bsnl connection A/c By Advertisement A/c By Purchased A/c By Electric Charges A/c By Telephone Exp A/c By Petty Expense A/c BY Entertainment Exp A/c By Maintenance Exp A/c By Staff Salary A/c By Drawings A/c By Bank Loan A/c By Interest on Loan A/c By balance c/d

J/F

Cr. AMOUNT 450000 2000 150000 5000 75000 135000 45000 15000 12000 9500 6400 40000 100000 50000 55100 1150000

TRAIL BALANCE FOR THE YEAR ENDED 31ST MARCH 2010 SL .NO PARTICULARS L/F AMOUNT (RS.) Dr. Cash Building Capital Bank Bank loan Computer Computer Company Deposit for Electricity BSNL Internet Connection Furniture Samrat Furniture Advertisement Sales Purchase Electricity Charges Telephone Charges Petty Expense Entertainment expenses 75000 135000 45000 15000 12000 5000 550000 2000 150000 17000 20000 40000 50000 55100 250000 50000 186000 500000 AMOUNT (RS.) Cr.

Maintenance charges Staff Salary Drawings Interest on bank Loan Depreciation

9500 6400 40000 50000 117000

1370000

1370000

Dr. PARTICULARS To Purchased A/c To Gross profit

Trading & Profit & Loss A/c For the Year ended 31st March 2010 AMOUNT PARTICULARS (Rs) 75000 By Sales 475000 550000 By Gross Profit

Cr. AMOUNT (Rs) 550000 550000 475000

To Advertisement A/c To Electricity A/c To Telephone A/c To Petty Expense A/c To Entertainment A/c To Maintenance A/c To Staff Salary A/c To Interest On loan A/c To Depreciation A/c To Net profit transfer to b/s

5000 135000 45000 15000 12000 9500 6400 50000 117000 80100 550000

550000

LIABILITIES capital Account During the year Add: Net profit Less : Drawing

500000 80100 40000

Bank Loan Computer Company Samrat Furniture

BALANCE SHEET AS ON 31ST MARCH 2010 AMOUNT ASSETS Building Less Depreciation Computer Less Depreciation 540100 Furniture Less Depreciation 250000 Deposit for Electricity 50000 BSNL internet connection 20000 Bank Cash 860100

AMOUNT 200000 14000 500000 100000 20000 3000 186000 400000 17000 2000 150000 55100 860100

PROFITABILITY RATIO TO BE CONSIDERED GROSS PROFIT RATIO G.P Ratio = Gross Profit/Sales *100 G.P ratio = 475000/550000 *100 G.P Ratio = 86.36 % By the G.P Ratio we can know that the company is not having fixed and direct expenses. Net Profit Ratio Net Profit Ratio = Net Profit/Sales *100 Net Profit = 80100/550000*100 Net profit Ratio is 14.56% By net Profit Ratio we can concluded that the company as per the industry standard is not good but as for the new business and 1st year concerned it is good because not only in the first year it has covered all its expenses but came up with a profit of 14.56%

Next it is important for us to know the Liquidity of the company

LIQUID RATIO CURRENT RATIO Current Ratio = Current Assets/Current Liabilities Current Ratio = cash + bank/creditors Current Ratio = 55100+50000/20000+50000 Current Ratio = 1.57 Here the current ratio and the liquid ratio will be same because there is no closing stock of raw material or else the raw material will be deducted while calculating the liquid ratio. All the transaction is in cash so there are no debtors. So the ideal ratio is 2:1 but the ratio what the company has is also good. It means that the company has enough money to pay to the creditors. Bank looks for the fixed assets the company has and the Long and short term debts that the company has. Here we see that the company has taken a loan to purchased fixed assets. Though the net profit ratio as per industry is not very attractive but considering the first year of operation the company has performed well. Bank can give short term loan or the working capital loan but as per my suggestion bank should not take a risk to give further loan because the company has already has a burden to pay for the interest on capital that it has taken further loan can decrease the profit.

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