Comprehensive Accountancy Project – 2019-2020

COMPREHENSIVE PROJECT

RAMA’S CYBER CAFÉ

Mr. Rama decided to commerce a computer business in a building which was constrained for Rs 1,00,000 and contributed a further sum of Rs 2,50,000. He wanted to start with 10 computers. He went on to HDFC bank and put up his proposal and managed to get a loan to the extent of 75 percent of the cost of the computer Rs 4,00,000 with pointers it was agreed that the loan was rapid in three annual installments as follows :

• At the end of first year = Rs 1,00,000 + 30000 interest
• At the end of 2^nd year = Rs 1,00,000 + 20000 interest
• At the end of the 3^rd year = Rs 1,10,000 (Rs 1,00,000+10000 interest)

He started business on 1^st Apr 2019 on the same date he deposited Rs 2,40,000 in the bank. He gave Rs 1,00,000 to the computer company as 25% of the value of the computer purchase & Rs 3,00,000 out of bank loan availed. He deposited Rs 10000 0 with VENL for the telephone internet connection he got the computer code finished by paying Rs 25,000 and also spent Rs 4520 on getting pamphlets printed and distributed. All payments were to be made by cheques and all the receipts were each to be deposited in the bank on the same day. At the end of the year, their results showed the following.

╔═════════════════════════════════════════════════════════════╦══════════╗
║ Revenue from fees from students of computer class           ║ 2,80,000 ║
╠═════════════════════════════════════════════════════════════╬══════════╣
║ Revenue on account of internet facility                     ║ 1,20,000 ║
╠═════════════════════════════════════════════════════════════╬══════════╣
║ Revenue from the sale of computer stationary                ║ 98,000   ║
╠═════════════════════════════════════════════════════════════╬══════════╣
║ Purchase of computer stationary like floppy disk, CDs, etc. ║ 55,000   ║
╠═════════════════════════════════════════════════════════════╬══════════╣
║ Telephone chargers                                          ║ 34,000   ║
╠═════════════════════════════════════════════════════════════╬══════════╣
║ Petty expenses                                              ║ 12,000   ║
╠═════════════════════════════════════════════════════════════╬══════════╣
║ Entertainment expenses                                      ║ 10,000   ║
╠═════════════════════════════════════════════════════════════╬══════════╣
║ Miscellaneous expenses                                      ║ 10,000   ║
╠═════════════════════════════════════════════════════════════╬══════════╣
║ Wages paid to servant                                       ║ 6,000    ║
╚═════════════════════════════════════════════════════════════╩══════════╝

He withdraws 61,000 by cheque each month for their expenses. He paid the bank loan regularly.

Required :

• journalise the above transactions. But then into the edge and prepare a trial balance

• Prepare profit loss and balance sheet after taking into account that electricity charges of Rs 124,000 are yet to be paid.
• Charge depreciation at the rate of 25% on computers 10% on furniture and 5% on building
• Calculate the profitability ratio and comment on the efficiency of the business if the net profit ratio and gross profit in a similar type of business concerns are 20% and 50% respectively.
• Mr. Rama wants to expand his business. He approached that bank for a further loan. Compose the ratio that the banker will require before granting the loan. Current ratio. The quick ratio and debt-equity ratio.

JOURNAL ENTRY

Date	Particular	LF	Dr (Rs)	Cr (Rs)
2019
April	Cash Ac		2,50,000
	Building Ac		1,00,000
	To capital Ac			3,50,000
	(being capital invested in the business)
April	Bank Ac		2,40,000
	To cash Ac			2,40,000
	(being cash deposited in Bank)
April	Bank Ac		3,00,000
	To bank Ac			3,00,000
	(being loan taken HDFC bank)
April	Computer Ac		4,00,000
	To bank Ac			4,00,000
	(being computer purchasing paying Rs 4,00000)
April	Electricity board Ac		1,000
	VSNL Ac		1,01,000	1,01,000
	(being security deposits with electricity board and VSNL)
April	Furniture and fixtures Ac		25,000
	To bank Ac			25,000
	(being café furniture)
April	Advisement Ac		4,500
	To bank Ac			4,500
	(being cheque issued for advisement)
31Mar	Depreciation Ac		1,07,500
	To computer Ac			1,00,000
	To furniture Ac			2,500
	To building Ac			5,000
	(being depreciation charged)

LEDGER POSTING

Cash A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2019 1 APRIL	To capital Ac		2,50,000	2019 1Apr	By bank Ac By balance		2,40,000 10,000
			2,50,000				2,50,000

Building

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2019	To capital Ac		1,00,000	2020	By Dep Ac		5,000
1 April				31 Mar	By B/c Cid		9,50,000
			1,00,000				1,00,000

Capital A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2020	To B/c c/d		3.50,000	2019	By buildings		1,00,000
31 Mar				1 Apr	By cash Ac		2,50,000
				1 April
			3,50,000				3,50,000

Computer A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2019	To bank Ac		4,00,000	2020	By Dep Ac		1,00,000
1 Apr				31 Mar	By B/c c/d		3,00,000
							4,00,000

Bank A/c

Date	Particular	LF	Amount	Date	particular	LF	amount
2019				2019	By computer A/c		4,00,000
1 April	To cash A/c		2,40,000	1 Apr
1 April	To bank loan A/c		3,00,000	2020
2020				31 Mar	By electricity-based		1000
31Mar	To sales		4,98000	31 Mar	By VSNL A/c		1,00,000
				31 Mar	By furniture		25,000
				31 Mar	By advertisement		4500
				31 Mar	By purchase A/c		55,000
				31 Mar	By telephone EP		341000
				31 Mar	By daily expenses		121000
				31 Mar	By entertainment		10,000
				31 Mar	By miscellaneous A/c		10,000
				31 Mar	By wages A/c		6000
				31 Mar	By bank wan		72,000
				31 Mar	By b/c c/d		1,30,000
2020			10,38,000				10,38,000
1 Apr	To balance b/d		1,78,500

Bank Loan A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2020   31 Mar	To bank Ac		1,30,000	2019   1 Apr	By bank Ac		3,00,000
31 Mar	To b/c c/d		2,00,000	31 Mar	By int on bank loan		30,000
							3,30,000
			3,30,000
				2020   1 Apr	BY b/c b/d		2,50,000

Electricity Board A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2019 1 Apr	To bank Ac		1000	2020 31 Mar	By B/c c/d		1000
2020 1 April	To b/c b/d		1000				1000
			1000

Vsnl A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2019 1 Apr	To bank Ac		1,00,000	2020 31 Mar	By b/c c/d		1,00,000
			1,00,000				1,00,000
			1,00,000

Sales A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2020 31Mar	To trading Ac		4,80,000	2020 31 Mar	By bank Ac		4,38,000

Purchase A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2020 31 Mar	To bank Ac		55,000	2020 31 Mar	By trading Ac		55,000
			55,000

Furniture A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2019	To bank Ac		25,000	2020	By Dep Ac		2500
1 Apr				31 Mar	By B/c c/d		22,500
							25,000

Advertisement A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2019 1 Apr	To bank Ac		4500	2020 31 Mar	By P&L AC		4500

Telephone Charges A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2019 1 Apr	To bank Ac		34,000	2020 31 Mar	By P&L Ac		34,000

Interest Of Bank Loan A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2020 31Mar	To bank loan Ac		30,000	2020 31 Mar	By P&L Ac		80,000

Entertainment Expenses A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2020 31 Mar	To bank Ac		10,000	2020 31 Mar	By P&L Ac		10,000

Drawing A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2020	To bank Ac		72,000	2020	By b/c c/d		72,000
31 Mar				31 Mar
			72,000				72,000

Petty Expense

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2020 31 Mar	To bank Ac		12,000	2020 31 Mar	By P&L AC		12,000

Wages A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2020 31 Mar	To bank Ac		6,000	2020 31 Mar	By trading Ac		6,000

Depreciation

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2020 31 Mar	To computer Ac		1,00,000	2020 31 Mar	By P&L Ac		1,07,500
31Mar	To furniture Ac		2900
31Mar	To building Ac		5000
			1,07,500				1,07,500

Miscellaneous Expenses A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2020 31 Mar	To bank Ac		10,000	2020 31 Mar	By P&L Ac		10,000

Electricity Charges A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2020 31 Mar	Tools electricity		1,24,000	2020 31 Mar	By P&L Ac		1,24,000

Electricity Payable A/c

DATE	PARTICULAR	LF	AMOUNT	DATE	PARTICULAR	LF	AMOUNT
2020	To B/c c/d		1,24,000	2020	By electricity		1,24,000
31 Mar				31 Mar	charge
			1,24,000				1,24,000

TRIAL BALANCE

TRIAL BALANCE AS OF SLOT MAR, 2020

PARTICULAR	AMOUNT
Cash Ac	10,000
Building Ac	95,000
Bank Ac	1,79,500
Computer Ac	3,00,000
Electricity board Ac	1,000
VSNL Ac	1,00,000
Furniture Ac	22,500
Advertisement Ac	4,500
Purchase Ac	55,000
Telephone charge Ac	34,000
Petty expense Ac	12,000
Entertainment expense Ac	10,000
Miscellaneous expense Ac	10,000
Wages Ac	6,000
Drawing Ac	72,000
Int. on Bank loan Ac	30,000
Dep Ac	1,07,500
Electricity charges Ac	1,24,000
Capital Ac	3,50,000
Bank loan Ac	2,00,000
Electricity payable Ac	1,24,000
Revenue from fees & sales Ac	4,98,000
Total	11,72,000

TRADING AND PROFIT AND LOSS

TRADING AND PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 MAR 2020

PARTICULAR	AMOUNT
To purchase Ac	55,000
To wages	6,000
To gross profit	4,37,000
	4,98,000
To advertisement Ac	4,500
To electricity Ac	1,84,000
To telephone charge Ac	34,000
To petty expenses Ac	12,000
To entertainment expenses Ac	10,000
To Int. on bank loan Ac	10,000
To depreciation Ac
Computer	1,00,000
Building	5,000
Furniture	2,500
To set profit	1,05,000
By sales	4,98,000
By gross profit	4,37,000
	4,37,000

BALANCE SHEET

BALANCE SHEET AS OF 31 MAR 2020

LIABILITIES	AMOUNT	ASSET	Amount
Bank loan	2,00,000	Cash in hand	10,000
Electricity payable Ac	1,24,000	Bank	1,78,500
		VSNL(security deposit)	1,00,000
Capital	3,50,000	Electricity based (S.D)	1,000
Less : drawing (72,000)		Computer	3,00,000
2,78,000		Building	95,000
Add net profit 1,05,000	3,83,000	Furniture	22,500
	7,07,000		7,07,000

1. Calculation of profitability Ratio

• gross profit Ratio : Gross profit x100 = 4,37,000 x 100 = 87.75%

Net sake                     4,98,000

• Net profit Ratio : Net profit x 100 =  1,05,000 x 100 = 21.08%

Net sake                    4,98,000

Note:  efficiency of business is quite satisfactory because net profit ratio and gross profit ratio are higher than the normal rate for a similar type of business organization

• Granting bank loan

Bank will see the following ratios before granting loan.

1. Current Ratio: current Asset

Current liabilities

= cash + Bank _______________________________________

Electricity payable + bank loan to repaid next year

=           10,000+8,600        =    1,88,500  = 84%

1,00,000 + 1,24,000       2,24,000

2. Quick current ratio will be same on current ratio because there is neither closing stock nor prepaid expenses