Aruna, decided to start business of fashion garments under the name M/S Designer Wear from 1st
April,2020. She had Savings of Rs. 10,00,000 .She invested Rs. 3,00,000 out of her savings and also
borrowed Rs.3,00,000 from State Bank of India. She purchased a commercial space of 500 sq. feet for
Rs. 5,00,000. The space so purchased was suitably renovated to make it ready as showroom.she
purchased furniture and fixtures for Rs . 75,000. Total amount of bank loan is to be repaid in 20
quarterly instalments beginning 30th June,2020. Annual rate of interest is 12% p.a.
Repayment Schedule of Bank Loan in the first year is as follows:
Due Date Principal Interest Instalment
June 30, 2020 15,000 9,000 24,000
September 30, 2020 15,000 8,550 23,550
December 31, 2020 15,000 8,100 23,100
March 31, 2021 15,000 7,650 22,650
She started business on 1st April, 2020 getting it registered under Goods and Services Tax (GST). In view
of further capital requirement, she further deposited Rs. 2,00,000 in the bank. She paid Security
Deposits of Rs. 5,000 for the electricity connection with BSES Rajdhani Power Ltd. and Rs. 2,000 to MTNL
for telephone connection. Furniture for Rs. 10,000 was purchased further.
All payments were to be made by cheque. All the receipts were in cash and to be
deposited in the bank in the morning of next day.
At the end of the year, her results showed the following:
Total Sales 20,00,000
Total Purchases 17,00,000
Electricity Expenses 40,000
Telephone Charges 50,000
Cartage Outwards 60,000
Travelling Expenses 45,000
Business Promotion (Restaurant Bill) Expenses 5,000
Maintenance Expenses 25,000
Miscellaneous Expenses 15,000
Electricity Expenses Payable 20,000
She withdrew Rs. 5,000 by cheque each month for her personal expenses.
Bank Loan was serviced and instalments were paid regularly.
1. Journalise the above transactions in the books of M/s Designer Wear, post them into the Ledger and
prepare the Trial Balance.
2. Also, prepare its Trading Account, Profit and Loss Account and Balance Sheet.
Charge depreciation @ 5% on Building and 10% on Furniture and Fixtures. Closing Stock at the end of
the year was 5,50,000
Posted by Naman Goyal
4 months, 3 weeks ago