Accountancy Project Workbook

Vinod Kumar has decided to start his own business (Sole Proprietorship).
For this purpose he

carried out a market survey.
After doing a lot of market research and survey, he decided to manufacture the following products:
(1) Smartphones
(2) Laptops
(3) Tablets
(4) Power Banks
He has decided to spend some amount of profit every year for the welfare of the remote areas.
He told his parents about his business ideas who gave him Rs.50,00,000 as an addition to his own
savings of Rs.5,00,000.
l He started business with Rs.55,00,000(Capital)
l He opened a Bank Account with ICICI bank in the name of business and deposited Rs.50,000.
l He found that his investment amount (Capital) is not enough to run the business. So he
decided to obtain a loan from IDBI (Bank) of Rs.15,00,000 @ 10% p.a.
 He purchased the following assets for business:
 Land and Building Rs.12,00,000
 Plant and Machinery Rs.7,00,000
 Office Furniture Rs.60,000
 Office Equipments Rs.40,000
 Stock Rs.4,00,000
Payment is made through cash Rs.15,00,000 and Balance through cheque.
l Goods purchased for cash Rs.5,00,000
l Goods purchased on credit Rs.7,00,000
l He also purchased a laptop for office use for Rs.40,000 and four computers for staff for
Rs.60,000
l Goods sold (Cash) Rs.11,00,000
l Goods sold (Credit) Rs.9,00,000
l Purchase return during the year Rs.50,000
l Sales return during the year Rs.30,000
l Cash received from debtors Rs.5,00,000
l Cash paid to creditors Rs.6,00,000
Project–1
l Bills Receivable Rs.60,000
l Bills Payable Rs.40,000
l Goods taken for personal use Rs.10,000
l Goods given as charity Rs.15,000
l Goods distributed as free samples Rs.20,000
l Rent paid for Office Building Rs.5,000
l Stationery purchased for office Rs.8,000
l Withdrawn from bank for office use Rs.1,50,000
l Paid electricity bill Rs.4,000
l Office expenses paid through cheque Rs.12,000
l Salaries paid to staff Rs.1,00,000
l Typewriter purchased for office use Rs.9,000
l Paid Rs.3,000 for repair of machinery
l Paid fire insurance premium for office building by cheque Rs.6,000.
l Paid for advertisement (TV and 'The Hindustan Times') Rs.60,000
l Printing and stationery expenses Rs.4,000
l Additional capital introduced by Mr. Vinod Kumar as per the requirement of Business
Rs.2,00,000
l A fire occurred in the godown and stock of the value of Rs.6,000 was destroyed. Nothing was
received from insurance company because these goods were not insured.
l Postage and telephone expenses Rs.2,000
l Carriage inward Rs.6,000
l Carriage outward Rs.5,000
l A new printer purchased for office Rs.7,000
l Bank charges Rs.1,000
l General expenses Rs.1,500
l License and registration fee Rs.800
l Transportation Expenses Rs.1,200
l Audit fees paid Rs.4,000
l Interest paid on bank loan (IDBI) by the bank (ICICI) as per the standing advice Rs.1,20,000
As an accountant you are required to Journalise these transactions and post them into ledger
accounts and prepare a Trial Balance.
(1) Prepare Trading and Profit and Loss Account for the year ending 31st March 2016 and balance
sheet on the same date after considering the following adjustments:
(a) Plant & machinery are to be depreciated @ 6% p.a.
(b) Depreciation on office furniture and office equipments is to be charged @8% p.a.
(c) Closing Stock at the end Rs.1,00,000.
(d) Salaries outstanding Rs.40,000
(e) Interest on bank loan outstanding Rs.30,000
(f) Manager will get commission on net profit after charging such commission @ 5% p.a. (only
in the case of profit).
Accountancy Project Workbook

Solution. Journal Entries
Date Particulars L.F Debit (`) Credit (`)
Cash A/c Dr. 55,00,000

To Capital A/c 55,00,000
(Being business commenced)
Bank (ICICI) A/c Dr. 50,000
To Cash 50,000
(Being bank (ICICI) account opened)
Bank (ICICI) A/c Dr. 15,00,000
To 10% Bank Loan (IDBI) 15,00,000
(Being loan obtained from bank)
Land and Building A/c Dr. 12,00,000
Plant and Machinery A/c Dr. 7,00,000
Office Furniture A/c Dr. 60,000
Office Equipments A/c Dr. 40,000
Stock A/c Dr. 4,00,000
To Cash A/c 15,00,000
To Bank (ICICI) A/c 9,00,000
(Being assets purchased)
Purchase A/c Dr. 5,00,000
To Cash 5,00,000
(Being goods purchased in cash)
Purchase A/c Dr. 7,00,000
To Creditors A/c 7,00,000
(Being goods purchased on credit)
Office Equipments A/c Dr. 1,00,000
To Cash A/c 1,00,000
(Being laptop purchased for office use)
Cash A/c Dr. 11,00,000
To Sales A/c 11,00,000
(Being goods sold in cash)
Debtors A/c Dr. 9,00,000
To Sales 9,00,000
(Being goods sold on credit)
Creditors A/c Dr. 50,000
To Purchase Return A/c 50,000
(Being goods returned)
Sales Return A/c Dr. 30,000
To Debtors A/c 30,000
(Being goods returned)
Cash A/c Dr. 5,00,000
To Debtors A/c 5,00,000
(Being cash Received from debtors)
Project–1
Creditors A/c Dr 6,00,000
(Being cash paid to creditors)
Bills Receivable A/c Dr. 60,000
To Debtors A/c
(Being bills receivable from debtors) 60,000
Creditors A/c Dr. 40,000
To Bills Payable 40,000
(Being bills payable to creditors)
Drawings Dr. 10,000
To Purchase A/c 10,000
(Being goods taken for personal use)
Charity A/c Dr. 15,000
(Being goods given as charity)
Free Samples A/c Dr. 20,000
(Being goods given as free sample)
Rent A/c Dr. 5,000
To Cash A/c 5,000
(Being rent paid)
Stationery A/c Dr. 8,000
To Cash A/c 8,000
(Being stationery purchased for office)
Cash A/c Dr. 1,50,000
(Being cash withdrawn from bank)
Electricity Expenses A/c Dr. 4,000
To Cash A/c 4,000
(Being electricity expenses paid)
Office Expenses A/c Dr. 12,000
To Bank (ICICI) A/c 12,000
(Being office expenses paid)
Salaries A/c Dr. 1,00,000
(Being salaries paid)
Office Equipments A/c Dr. 9,000
To Cash A/c 9,000
(Being typewriter purchased for office use)
Repair A/c Dr. 3,000
To Cash A/c 3,000
(Being repair expenses paid)

Fire Insurance Premium A/c Dr. 6,000
(Being fire insurance premium paid)
Advertisement A/c Dr. 60,000
To Cash A/c 60,000
(Being advertisement expenses paid)
Printing and Stationery A/c Dr. 4,000
To Cash A/c 4,000
(Being printing and stationery expenses paid)
Cash A/c Dr. 2,00,000
To Capital A/c 2,00,000
(Being additional capital introduced)
Loss by fire A/c Dr. 6,000
(Being goods lost by fire)
Postage and Telephone expenses A/c Dr. 2,000
To Cash A/c 2,000
(Being postage & telephone expenses paid)
Carriage Inward A/c Dr. 6,000
To Cash A/c 6,000
(Being carriage inward expenses paid)
Carriage Outward A/c Dr. 5,000
To Cash A/c 5,000
(Being carriage outward expenses paid)
Office Equipment A/c Dr. 7,000
To Cash A/c 7,000
(Being printer purchased for office)
Bank Charges A/c Dr. 1,000
(Being bank charges charged by bank)
General Expenses A/c Dr. 1,500
To Cash A/c 1,500
(Being general expenses paid)
License and Registration fee A/c Dr. 800
To Cash A/c 800
(Being license & registration fee paid)
Transportation Expenses A/c Dr. 1,200
To Cash A/c 1,200
(Being transportation expenses paid)
Audit Fees A/c Dr. 4,000
To Cash A/c 4,000
(Being audit fee paid)
Project–1
Interest on Bank Loan A/c Dr. 1,20,000
(Being interest on bank loan paid)
Preparation of Ledger Accounts:

Cash Account
Particulars Amount ( ` ) Particulars Amount ( ` )

To Capital A/c 55,00,000 By Bank A/c 50,000
To Sales A/c 11,00,000 By Assets A/c 15,00,000
To Debtors A/c 5,00,000 By Purchase A/c 5,00,000
To Bank A/c 1,50,000 By Office Equipments A/c 1,00,000
To Capital A/c 2,00,000 By Creditors A/c 6,00,000
By Rent A/c 5,000
By Stationery A/c 8,000
By Electricity Expenses A/c 4,000
By Salaries A/c 1,00,000
By Office Equipment A/c 9,000
By Repair A/c 3,000
By Advertisement A/c 60,000
By Printing & Stationery A/c 4,000
By Postage & Telephone Exp. 2,000
By Carriage Inward A/c 6,000
By Carriage Outward A/c 5,000
By Office Equipments A/c 7,000
By General Expenses A/c 1,500
By License and Registration A/c 800
By Transportation A/c 1,200
By Audit Fee A/c 4,000
By Balance c/d 44,79,500
74,50,000 74,50,000
To Balance b/d 44,79,500
Capital Account

To Balance c/d 57,00,000 By Cash A/c 55,00,000
By Cash A/c 2,00,000
57,00,000 57,00,000
By Balance b/d 57,00,000
Bank Account (ICICI)

To Cash A/c 50,000 By Assets A/c 9,00,000
To 10% IDBI Bank Loan 15,00,000 By Cash A/c 1,50,000

By Office Expenses A/c 12,000
By Fire Insurance Premium 6,000
By Bank Charges 1,000
By Interest on bank loan 1,20,000
15,50,000 15,50,000
10% IDBI Bank Loan Account

By Bank A/c 15,00,000
To Balance c/d 15,00,000
15,00,000 15,00,000
Land and Building Account

12,00,000 12,00,000
Plant and Machinery Account

7,00,000 7,00,000
Office Furniture Account

To Balance b/d 60,000
By Balance c/d 60,000
60,000 60,000
Office Equipments Account

To Cash A/c 1,00,000 By Balance c/d 1,56,000
To Cash A/c 9,000
To Cash A/c 7,000
1,56,000 1,56,000
Project–1
Stock (Inventory) Account

4,00,000 4,00,000
Purchase Account

To Cash A/c 5,00,000 By Loss by fire 6,000
To Creditors A/c 7,00,000 By Charity 15,000
By Purchase A/c 10,000
By Free Samples 20,000
12,00,000 12,00,000
Creditors Account

To Purchase Return A/c 50,000 By Purchase A/c 7,00,000
To Bills Payable A/c 40,000
To Balance c/d 10,000
7,00,000 7,00,000
By Balance b/d 10,000
Sales Account

By Cash A/c 11,00,000
To Balance c/d 20,00,000 By Debtors A/c 9,00,000
20,00,000 20,00,000
Debtors Account

To Sales A/c 9,00,000 By Sales Return A/c 30,000
By Cash A/c 5,00,000
By Bills Receivable 60,000
9,00,000 9,00,000

Purchase Return Account

By Creditors A/c 50,000
50,000 50,000
Sales Return Account

30,000 30,000
Bills Receivable Account

60,000 60,000
Bills Payable Account

By Creditors A/c 40,000
40,000 40,000
Drawings Account

10,000 10,000
Charity Account

15,000 15,000
Project–1
Free Samples Account

20,000 20,000
Rent Account

To Cash A/c 5,000
5,000 5,000
Stationery Account

To Cash A/c 8,000
8,000 8,000
Electricity Expenses Account

To Cash A/c 4,000
4,000 4,000
Office Expenses Account

To Bank A/c 12,000
12,000 12,000
Salaries Account

1,00,000 1,00,000
ccountancy Project Workbook

Repair Account

To Cash A/c 3,000
3,000 3,000
Fire Insurance Premium Account

To Bank A/c 6,000
6,000 6,000
Advertisement Account

To Cash A/c 60,000
60,000 60,000
Printing and Stationery Account

To Cash A/c 4,000
4,000 4,000
Loss by Fire Account

To Bank A/c 6,000
6,000 6,000
Postage & Telephone Expenses Account

To Cash A/c 2,000
2,000 2,000
Project–1
Carriage Inward Account

To Bank A/c 6,000
6,000 6,000
Carriage Outward Account

To Bank A/c 5,000
5,000 5,000
Bank Charges Account

To Bank A/c 1,000
1,000 1,000
General Expenses Account

To Bank A/c 1,500
1,500 1,500
License and Registration Fee Account

To Bank A/c 800
By Balance c/d 800
800 800
To Balance b/d 800
Transportation Expenses Account

To Bank A/c 1,200
1,200 1,200

Audit Fee Account

To Bank A/c 4000
By Balance c/d 4000
4000 4000
To Balance b/d 4000
Interest on Bank Loan Account

To Bank A/c 1,20,000
1,20,000 1,20,000
Trial Balance
Particulars Debit Credit
Cash 44,79,500
Capital ......... 57,00,000
Bank 3,61,000 ........
10% IDBI Bank Loan 15,00,000
Land and Building 12,00,000 ........
Plant and Machinery 7,00,000 ........
Office Furniture 60,000 ........
Office Equipments 1,56,000 ........
Stock 4,00,000 ........
Purchase 11,49,000 ........
Creditors ....... 10,000
Sales ....... 20,00,000
Debtors 3,10,000 ........
Purchase Return ...... 50,000
Sales Return 30,000 ........
Bills Receivable 60,000 ........
Bills Payable ...... 40,000
Drawings 10,000 ........
Charity 15,000 ........
Free Samples 20,000 ........
Rent 5,000 ........
Stationery 8,000 ........
Electricity Expense 4,000 ........
Office Expense 12,000 ........
Salaries 1,00,000 ........
Project–1
Repair 3,000 ........
Fire Insurance Premium 6,000 ........
Advertisement 60,000 ........
Printing and Stationery 4,000 ........
Loss by Fire 6,000 ........
Postage and Telephone Expenses 2,000 ........
Carriage Inward 6,000 ........
Carriage Outward 5,000 ........
Bank Charges 1,000 ........
General Expenses 1,500 ........
License & Registration Fee 800 ........
Transportation Expenses 1,200 ........
Audit Fee 4,000 ........
Interest on Bank Loan 1,20,000 ........
73,00,000 73,00,000
Trading Account

To Opening Stock 4,00,000 By Sales 20,00,000
To Purchases 11,49,000 Less : Return 30,000 19,70,000
Less : Return 50,000 10,99,000 By Closing Stock 1,00,000
To Carriage Inward 6,000
To Gross Profit 5,65,000
20,70,000 20,70,000
Profit and Loss Account

To Charity 15,000 By Gross Profit b/d 5,65,000
To Free Samples 20,000
To Rent 5,000
To Stationery 8,000
To Electricity Expenses 4,000
To Office Expenses 12,000
To Salaries 1,00,000
Add : outstanding 40,000 1,40,000
To Repair 3,000
To Fire Insurance Premium 6,000
To Advertisement 60,000
To Printing & Stationery 4,000
To Loss by fire 6,000
To Postage & Telephone 2,000
To Carriage outward 5,000

To Bank Charges 1,000
To General Expense 1,500
To License & Registration 800
To Transportation Expense 1,200
To Audit Fee 4,000
To Int. on Bank Loan 1,20,000
Add : Outstanding 30,000 1,50,000
To Dep. on Plant & machinery 42,000
To Dep. on Office Furniture 4,800
To Dep. on Office Equipments 12,480
To Net Profit 57,220
5,65,000 5,65,000
To Manager's Commission 2,725 Net Profit b/d 57,220
57,220 × 5/105
To Adjusted N/P 54,495
57,220 57,220
Balance Sheet
Liabilities Amount ( ` ) Assets Amount ( ` )

Capital 57,00,000 Land and Building 12,00,000
Add : N/P 54,495 Plant & Machinery 7,00,000
Less : Drawings 10,000 57,44,495 Less : Depreciation 42,000 6,58,000
10% Bank Loan (IDBI) 15,00,000 Office Furniture 60,000
Interest outstanding on loan 30,000 Less : Depreciation 4,800 55,200
Creditors 10,000 Office Equipments 1,56,000
Bills Payable 40,000 Less : Depreciation 12,480 1,43,520
Salaries Outstanding 40,000 Debtors 3,10,000
Manager's Commission 2,725 Bills Receivable 60,000
Stock 1,00,000
Bank 3,61,000
Cash 44,79,500
73,67,220 73,67,220
Project–1
Conclusion
i Investment : The amount invested by Mr. Vinod Kumar is very effective and able to make the
profit in the first year of its working.
i Financing : Mr. Vinod Kumar has successfully arranged the finance for the business and used it
in a very systematic way.
i Expansion : Cash in hand Rs.44,79,500 is a big amount, Mr. Vinod Kumar can use this amount
for the expansion of the business.

Accountancy Project Workbook - 1 PDF

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Vinod Kumar has decided to start his own business (Sole Proprietorship).

For this purpose he

l Transportation Expenses Rs.1,200

l Audit fees paid Rs.4,000

Date Particulars L.F Debit (`) Credit (`)

Cash A/c Dr. 55,00,000