Charu decided to start business of fashion garments under the name of M/s. Bella Wear on 1st April, 2023. She had a saving of about - 10,00,000. She…

CA Foundation · Accounting · RTP · May 2025
Charu decided to start business of fashion garments under the name of M/s. Bella Wear on 1st April, 2023. She had a saving of about - 10,00,000. She invested - 3,00,000 out of her savings and borrowed equal amount from bank. She purchased a commercial space for 5,00,000 and further spent - 1,00,000 on its renovation to make it ready for business. Loan and interest repaid by her in the first year are as follows: 30 th June, 2023 -15,000 principal+9,000 interest 30 th September, 2023 -15,000 principal+8,550 interest 31 st December, 2023 -15,000 principal+8,100 interest 31 st March, 2024 -15,000 principal+7,650 interest. In view of further capital requirement, she transferred - 2,00,000 from her saving bank account to the bank account of the business. She paid security deposit of 7,000 for telephone connection. Furniture of 10,000 was purchased, All payments were made by cheque and all receipts in cash were deposited in the bank. At the end of the year, her business showed the following results: Particulars Amount Particulars Amount Total Sales 20,00,000 Total Purchases 17,00,000 Electricity Expenses paid 40,000 Telephone Charges 50,000 Cartage Outwards 60,000 Travelling Expenses 45,000 Entertainment Expenses 5,000 Maintenance Expenses 25,000 Misc. Expenses 15,000 Electricity Expenses Payable 20,000 Other Information: (i) She withdrew - 5,000 by cheque each month for her personal expenses. (ii) Depreciation on building @5% p.a. and oil furniture @10% p.a. (iii) Closing stock in hand as on 31st March, 2024 :5,50,000 Prepare trading account, profit and loss account for the year ended 31st March, 2024 and Balance Sheet as on that date.

Suggested Answer and Working Notes:

In the books of M/s Bella Designer wear Trading and Profit & Loss Account (for the year ending 31.3.2024) Particulars ₹ ₹ To Purchases 17,00,000 By Sales 20,00,000 To Gross profit 8,50,000 By Closing stock 5,50,000 25,50,000 25,50,000 To Interest (₹ 9,000+8,550+8,100+7,650) 33,300 By Gross profit 8,50,000 To Telephone charges 50,000 To Travelling expenses 45,000 To Maintenance expenses 25,000 To Entertainment expenses 5,000 To Electricity exp 40,000 Add: outstanding 20,000 60,000 To Carriage outward 60,000 To Depreciation Building5% 30,000 Furniture10% 1,000 31,000 To Misc. exp 15,000 To Net profit 5,25,700 8,50,000 8,50,000 Balance Sheet as on 31st March, 2024 LIABILITIES Particulars ₹ ASSETS Particulars ₹ Capital 3,00,000 Building 6,00,000 Further Capital 2,00,000 Less: dep 30,000 5,70,000 Less: Drawings (60, 000) Furniture 10,000 Add: Net profit 5,25,700 9,65,700 Less: dep 1,000 9,000 Bank Loan 3,00,000 Security deposit-Telephone 7,000 Less: repayment 60,000 2,40,000 Bank 89,700 outstanding electricity exp 20,000 Closing stock 5,50,000 12,25,700 12,25,700 Working note: Bank Account Particulars ₹ Particulars ₹ To Capital 3,00,000 By Building 6,00,000 To Further capital 2,00,000 By Furniture 10,000 To Bank loan 3,00,000 By Bank loan repaid 60,000 To Sales 20,00,000 By Interest 33,300 By Security deposit 7,000 By Drawings 60,000 By Purchase 17,00,000 By Telephone charges 50,000 By Travelling expenses 45,000 By Maintenance expenses 25,000 By Entertainment expenses 5,000 By Electricity expenses paid 40,000 By Carriage outward 60,000 By Misc. expenses 15,000 By Balance c/d 89,700 28,00,000 28,00,000

Topics: Preparation of Final Accounts of Sole Proprietors

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