Question

Analyzing the effects of Business Transactions:
On March 1, Suresh starts software development center for developing customer-specific computer software. The
transactions for the said month are as follows:
1) Investment by owner : On March 1, Suresh invests Rs 50,000/- in cash in the company.
2) Receipt of loan : On March 2, Suresh took a loan of Rs 20,000/- from Manoj for the company.
3) Purchase of assets on credit : On March 3, Suresh purchased 2 computers with accessories, costing Rs
22,000/- each.
4) Purchases on cash : On March 4, purchased supplies of floppy disks Rs 1000/-.
5) Purchase returns : On March 6, assets’ accessories purchased on March 3, worth Rs 1000/- being faulty,
was returned to suppliers.
6) Purchases on credit: On March 10, purchased stationery for Rs 6,000/- on credit.
7) Receipt of revenue: On March 19, the company completes its maiden sale of software to a retail store
and receives a sum of Rs 15,000/-.
8) Revenues receivables: On March 20, billed customers for services rendered, Rs 19,000/-.
9) Payment of a liability: With more cash now than in the beginning, on March 21, the company paid Rs
2000/- to its creditors for stationery purchased.
10) Payment of expenses: On March 29, the company pays salaries to its employees, amounting to Rs
4000/- and office rent of Rs 1,200/-.
11) Revenues receivables: On March 30, the company completes a software package, the customer agrees
to pay the price of Rs 8,000/- a week later.
12) Payments: On March 30, Repaid a part of the Manoj's loan, Rs 5,000/- along with interest of Rs. 500/-.
13) Withdrawal by owner: On March 31, Suresh withdraws Rs 3,500/- for his personal use.
14) Depreciation is provided @ 5% for the month of March.
15) Tax @ 20% to be provided.
Required :
Prepare, for the month of March:
1. Transaction statement (in the format taught in class A+E = L+I), (15 m)
2. Income statement (5 m)
3. Balance Sheet (5 m)

Answer 1

Transaction Statement:
SL.	Assets					=	Liabilities +		LT Liabilities+	SH Equity			Income Statement
	Cash	AR	supplies	Stationery	Equipment	=	AP	Inc. tax payable	Loan	Capital	Ret. Earning	=	Rev. -	Expenses
1	50000					=				50000
2	20000					=			20000
3					22000	=	22000
4	-1000		1000			=
5	1000		-1000			=
6				6000		=	6000
7	15000					=							15000
8		19000				=							19000
9	-2000					=	-2000
10	-4000					=								-4000	Salaries
	-1200					=								-1200	Rent
11		8000				=							8000
12	-5500					=			-5000					-500	Interest
13	-3500					=				-3500
14					-92	=								-92	Depreciation
15						=		7241.6						-7241.6	Taxes
Bal.	68800	27000	0	6000	21908	=	26000	7241.6	15000	46500	28966.4	0	42000	-13033.6

Income Statement:
	Amount $
Revenues	42000
Less:Expenses:
Salaries	4000
Rent	1200
Interest	500
Depreciation	92
Taxes	7241.6
Total expenses	13033.6
Net Income	28966.4
Balance Sheet:
Assets	Amount $
Cash	68800
Acc Receivable	27000
Stationery	6000
Current assets	101800
Equipment	22000
Acc Dep	-92
Total Assets	123708
Liabi & SH Equity:	Amount $
Acc payable	26000
Inc. tax payable	7241.6
Current Liabilities	33241.6
LT Liabilities:
Loan	15000
Total Liabilities	48241.6
Sh. Equity:
Capital	46500
Ret. Earnings	28966.4
Total Liabi. & SH Eq.	123708