4 Proforma of Project File il Acknowledgment I would like to convey my thanks to Mr/Mrs/Ms. .. .., my Accountancy teacher who always gave valuable suggestions and guidance for completion of my project. He/she helped me to understand and remember the important details of the project that I would have otherwise lost. My project has been a success only because of his/her guidance. Name of the Student: Roll No, Certificate of .. sree He/she has taken '\ Lcertify that this project is up to my expectation and as per the latest guidelines issued by CBSE, New Delhi. 4 Mr/Mrs./Ms/ | (P.G-T. Accountancy) (Signature) Introduction and Details of the Project 1. Name of the Student .. » Class... Section . 2. Name of the Teacher . 3, Name of the School 4. Title of the Project 5. Objectives of the Project . 6. Period of Study .. 4 7. Others . ! Index S.No. | Title of the Project [Type of Project| Page No. Sources, Remarks [Teacher's Signature 1 [Comprehensive Self 4 Specific [Annual Report of Co. 3. Specific .. [Annual Repor of Co. On Ist April, 2018, Mrs. Kanchan Walia started a gym and physical fitness cent 214,00,000. She opened a bank account by depositing €9,60,000 in it. She her locality for setting up her gym, it cost €4,00,000, The payment was re with a capital of purchased a building in made through cash. She Project wore /dgtacsnsestenmanaged to get a loan of €12,00,000 for this purpose. ‘The loan was repayable with interest of %2,40,000 in three yearly instalments. At the end of the first year, she had to repay €5,20,000 [4,00,000 (principal) + 1,20,000 (interest)]. Kanchan purchased ex ing machines and equipments for ¥16,00,000 plus GST @18%, She gave €4,000 for electricity connection. In this tech-savy world, to run a business successfully, she purchased computers worth &3,90,000 pl and SGST @% each. and paid a deposit of %10,000 with VSNL for internet connection. She got her gym furnished by paying €1,00,000 plu CGST and SGST @14% each. She made people aware about her gym by distributing pamphlets which cost her €18,000. ‘All payments were to be made by cheques. All the receipts were in cash to be deposited in the bank on the same day. The membership of the gym was available for €5,000 for six weeks, ‘Atthe end of the year (31st March, 2019) the position of her business showed the following: z ‘Total revenue realised (services were provided charging CGST and 19,92,000 SGST @6% each) ‘Outstanding Electricity Charges (GST Not applicable) 1,24,000 ‘Telephone Charges 4,000 Petty Expenses 48,000 Entertainment Expenses 40,000 Maintenance Expenses 40,000 ‘The above mentioned expenses are subjected to levy of CGST and SGST @6% each. Purchase of fitness magazines CDs and books 2,20,000 Wages for the staff maintaining the gym 1,26,000 She appointed three fitness trainers for the gym. They were to be paid @3,72,000 for their services, But their salaries for the year were outstanding. She withdrew %24,000 by cheque cach month for her household and personal expenses. At the end of the year, she paid instalment of bank loan with interest. You are required to: ( Journalise the above transactions. Post them into ledgers and prepare (ii) Prepare Final Accounts of Kanchan Walia. (ii) Charge depreciation @ 25% on machines and equipments, 10% on furniture and fixtures and 5% on building. (jv) Calculate profitability ratios. (o) She approached the bank for further loan. Compute the ratios that the banker will require before granting the loan, (Current ratio, Quick ratio and Debt-equity ratio) (oi) Comment on the efficiency of the business ifthe net profit ratio and gross profit ratio in similat type of business concerns are 20% and 50% respectively. Solution: Introduction of the Project: ‘The project requirements are (i) to make accounting records of all the accounting transactions (ii) to prepare a trial balance of the business (ii) to prepare financial statements of the business. vatmnamatpaypiar idea Accountancy-Xll{i2) to assess the profitability of the business. (0) to assess the solvency of the business. Execution of the Project: (@ Pass journal entry for each transaction and prepare ledger. i) Prepare the Trial Balance of the business. (i) Prepare Profit and Loss Account and Balance Sheet at the end of the year. () Calculate Gross Profit Ratio and Net Profit Ratio to assess the profitability of the business. (2) Calculate Current Ratio and Debt-Equity Ratio to assess the solvency of the business. Journal | (Being building purchased for cash vett [Bank Ae Dr. ‘eit | Machines and Equipments A/c I [fet | Electricity Board Ale ‘eat | Fumiture and Fotures Alc 2019 March 31 Particulars Cash Alc, Dr. | (Being capital invested) vett [Building Ave Dr. eid sccount opened in bank) cca] teas [Bank Ale Dr LF. To Capital Ae To Cash Alc | | To Cash Ae | To Bank Loan Ale ing loan taken from bank) Rg Input IGST Ale To Bank Ale (Being machines and equipments purchased plus IGST g To Bank Alc (Being security deposits made with Board) RRQ Input Cost Alc Input S6ST Ae To Bank Ae (Being gym funished plus CGST and SGST @14% each) ‘Computers Ale Input Cost Are Input SGST Ae To Bank Ac (Being computer purchased plus CGST and SGST @ 9% each) — VSNL Deposit Alc To Bank Ac (Being cash paid for VSNL connection) ‘Advertisement Alc Rg “To Revenue from Membership Fees and Services Alc To Output CGST Ale To Output SGST Alc (Going total revenue received plus charged CGST and SGST @6% each) Dr. &) 3) 10,000March 31 | Purchases Alc Dr. 2,20,000 To Bank Ne 2,20,000 (Being books, magazines and CDs purchased) March 31 | Telephone Charges Alc or. ere Petty Expenses Ale or 48,000 Entertainment Expenses Alc or. 40,000 Maintenance Expenses Ale or. 40,000 Input CGST Ale Dr. 9,720 Input SGST Ac Or. 9.720 To Bank Alc 181,440 (Geing expenses paid plus CGST and SGST @6% each) March 31 | Wages Alc 1,26,000 To Bank Ac 4.28.00 (Being payment of wages) | March 31 | Drawings Ac OF. 2,88,000 To Bank Ale 2,88,000 (Boing amount withdrawn by proprietor) os March 31 [ Capital Ac Or. 2,88,000 To Drawings Ac 2,88,000 (Boing 6 djusted against capital a March 31 | Interest on Bank Loan Ale Or 1.20,000 ‘To Bank Loan A/c 4,20,000 (Boing interest on bank loan due} | March 31 | Bank Loan A/c or. 20,000 To Bank Alc 5,20,000 {Boing instalment of Bank loan paid including interest) — | March 31 | Depreciation A/c on | 4.20,000 To Buildings Ale | 20,000 To Machines and Equipments Ale 4,00,000 To Fumiture and Fixtures Ale 10,000 (Being depreciation provided) March 31 | Electricity Charges Ale or. 4.24,000 To Electricty Charges Payable Ac 4,24,000 | (Being outstanding electricity charges) March 31 | Salaries Ale Dr. 3,72,000 : To Outstanding Salaries Ale 3,72,000 (Boing salaries outstanding) Dr. Bank Account cr. Date | Particulars JF. @|Date | Particulars JF. a) 2018 208 | T ‘Apri |ToCash Ale 9,60,000 April1_| By Machines and Equipments 16,00,000 Ac April | To Bank Loan Ae 42,00,000 By Input IGST Alc 2,88,000 2019 By Electricity Board Ale 4,000 Mar, 31. | To Revenue from By Fumiture and Fixtures Ale 400,000 19.92,000 Fees and Services Alc To Output CGST Ale 41,19,520 By Input CGST Ale 414,000 To Output SGST Alc 1,19,620 By Input SGST Alc 14,000 By Advertisement Alc 18,000 By Computers Ale 3,90,0001 mmnermagayfear idea Accountancy-Xil wwBy Input CGST Alc 35,100. ‘By Input SGST Alc 35,100, ‘By VSNL Deposit Alc 10,000 | 2019 | By Purchases (fess, books and 2.20,000 | Mar. 31 | magazines, ote.) Ac By Telephone Expenses Alc 34,000 By Petty Expenses A/c 48,000, By Entertainment Expenses Ac 40,000 By Maintonance Expenses Alc 40,000 | By Input CGST Ac 9,720 | By Input SGST A/c 9,720 | By Wages A/c 1,26,000 By Drawings A/c 2,88,000 | By Bank Loan Alc 5,20,000 | 2019 | Mar. 31 | By Balance eld 5,47,400 43,91,040 2019 oe ea] _ Dr - Cash Account Gr. i | (©)[Date___|Particulars. JF. a 7] 18 (2018 liga [To Capita ve | 14,00,000]Apat1_ [By Bank Ave 960,000] | lAprit 1 [By Building Alc 4,00,000| | | 2019 | Mar. 31 40,000} .7 14,00,000} Lovo i Yea [To Balance bid | 40,000] _ _ Dr. 7 SNL Deposit Account Cr. fe —aceaton 2 ces Pa ee pote | 2019 beat [To Bank Ne | 10,000|Mar. 31. [By Balance cid 10,009} | Et0,000) 40,000] Row | | Wet! _[ToBalance nig | 10,000] Be ‘Telephone Expenses Account [Particuiars JF. [Date [Particulars JF, we | Laore 31 To Bank Wve 34.000|Mar. 31. [By Profit and Loss Alc 34,000] i 7 34,000) '34,000| Be Petty Expenses Account cr. [Particulars oF. Date [Partie 5 poe 12019 - ee a) Mar 31. [To Bank Ac 48,000|Mar. 31 |By Profit and Loss Alc 48,000] 48,000 ~ Project WESDr. Entertainment Expenses Account Cr. pete _|Particulers, WWF. @)[Date [Particulars [sr @ 2019 ‘2019 [Mar 31 |To Bank A/c 40,000|Mar. 31 [By Profit and Loss Alc 40,000| L 40,000 40,000 Dr. Furniture and Fixtures Account Cr. [Date \Particulars VF. )|Date [Particulars JF. ® 2018 2019 Japs |To Bank Ale 1,00,000]Mar. 31. |By Depreciation Alc 10,000 By Balance old $0,000) 100,000] Port {To Balance bid 90,000 Dr. Advertisement Account Cr. Dato [Particulars la. [Date [Particulars lor. a 2018 2019 laprt 1 To Bank A 18,000|Mar. 31. [By Proft and Loss Ac 18,000 18,000] 718,000] Dr. Purchases Account (Books and Magazines) Cr. Date [Particulars [o. “ate [Particulars Ur. al 2019 i2019 IMar.31 [To Bank A/c 2,20,000|Mar. 31. |By Prof and Loss Ac 2,20,000) 2,20,000 2,20,000) Dr. Electricity Charges Account Cr. [bate [Particulars [ar @)[Pate [Particulars DF. a 2019 2019 Mar. 31. To Electricity Charges Payable 1,24,000]Mar. 31. [By Proft and Loss Ale 424,000 Ne 724,000 Dr. Salaries Account Cr. [Date [Particulars lor. [pate [Particulars lar a 2019 2019 IMar.31. |To Outstanding Salaries Ac 3,72,000|Mar. 31. |By Profit and Loss Ale 3,72,000] 372,000 372,000] Dr. Maintenance Expenses Account Cr. [Date [Particulars [oF @[Date Particulars lar 2019 l2o19 IMar.31. [To Bank Ale 40,000|Mar. 31. By Proft and Loss A/c 40,000) 49,000 40,000) Dr. ‘Wages Account cr. [Date [Particulars lor. [Date [Particulars ar. 2019 ot IMar. 31 [To Bank Alc 1,26,000|Mar. 31 |By Profit and Loss Ale 1,26,000| 1,26,000) 1,26,000 memmsniesg6:/xar idea Accountancy-XilDrawings Account D [partiouters a [bate [Particulars @ hos 2019 yar. 31 [To Bank Alc 2,88,000|Mar. 31 |By Capital A/c L 2,88,006) Dr. Capital Account Gs (owe [Particulars lyr. [Date [Panicutare JF. ©) 2019 12018 Ir.21, [To Drawings Ave 2,88,000|Apri 1 |By Cash Ale *14,00,000 |wor.31. |To Balance old +14,12,000] 44,00,000) [14.00.00] lzor9 lapri 1 |By Balance b/d 41,12,000) Dr. Building Account Gr. fowte [Particulars Bi @[pate [Particulars JF. i) lore izore lini [To Cash Ale 4,00,000)Mar. 31. |By Depreciation Alc 20,000 IMar.31. [By Balance cla 3,80,000 400,000] 4,00,000) oo } 4.000 ligi't_|To Balance b/d 3,80,000 Dr. Machines and Equipments Account cr. ‘pate [Particulars jus @)|Date [Particulars JF. @) ‘ote Lore lypd't [To Bank Ave 16,00,000|Mar.31 [By Depreciation Ale 4,00,000 Mar. 31. |By Balance oid 12,00,000| 76,00,000 76,00,000) Zora Wnt 1 _ [To Balance b/d 12,00,000] Dr. Bank Loan Account Cr. Date [Particular lar. (date [particulars oF. © fois lzote IWar 31. |T0 Bank Ave 5,20,000]Apr 1 ay Bank Ale 12,00,009} Wer 31. |T0 Batance ois 8,00,000}2019 IMarch 31 [By interest on Loan Ale 1.20.00] 13,20,000 73720,000) 2019 [Apri 1 _|By Balance bia 8,00,000| Dr. Computers Account Gr. [Pate |particuta Jar. (@|Date [Particulars JF @ fore 2019 Janis To Bank Ae 3,90,000|Mar 31. |By Balance cid 3.90,000) 380,000) 3.90) 019 [Mar. 31 |To Balance bid 3,90,000} Project work /agrasmienDr. Depreciation Account c. [Date __|Particutars, [ar @[Date [Particulars ae] 2 2019 foe | | Mar, 31. |To Buildings Ac 20.000 Mar.31 ByProftendlosAe | | sano Mar. 31 |To Machines and Equipments A/c -4,00,000) | i [Mar. 31. |To Fumiture and Fixtures A‘c 10,000 | _ | | — 30,000) [s30000 Dr. Interest on Bank Loan Account Gr. ' [Date [Particulars lar. @[pate _[Particutars JF. a: 2019 | jae | \ | Mar. 31 |To Bank Loan Alc 41,20,000|Mar.31. [By Proftand Loss Ne | 120.000 aa | 7205000 (cael + L 20.000) Dr. Electricity Board Account (Security Deposit) ce. | Date [Paricutars DF @[pate__[Parvcutars Tae a [2018 | fue: | lapri1 [To Bank Ale | 4,000)Mar.31 By Balance cid | 4.000 4.000) (4009) 2019 | | laprilt_|To Balance bid [| 4.000) I Dr. Outstanding Salaries Account Cr. [Date [Particulars Dr. (@)[Date__ [Particulars oF. a [2019 zoe | 1 Mar3t. [To Balance od | .72000)Mar.31. By Salaes Ne 1 | ar2.000 — } -ud (sree) | 7000} | |ao19 | | [Apel 1_By Balance bid 3.72000) Dr. ‘Revenue from Membership Fees and Services Account cr [bate [Particulars br. @[pate [Particulars lar. a [2018 | acre | | | Mar. 31. [To Profit and Loss Alc | 19.92,000)Mar. 31. |By Bank Ale | 19,92,000) | 19,92,000) | 79.82.00 Dr. Electricity Payable Account cr. Date [Particulars JF @[Date [Particulars LF. a "2019 aos | IMar.31_ [To Balance ot | 41.24,000|Mar.31 [By Electcty charges Ale 1,24,000] | 828000) | 124.000 | | 2019 | [Apri + _|By Balance bia 41.24,000) Dr. Input IGST Account Cr [Date [Particulars LF. @[Date__[Particulars DF. al 2018 aoe [April 1 [To Bank Alc (Machinery and 2,88,000|Mar. 31 |By Batance cd 288,000) |Equipments) | 2,88,000} 2,88,000) 2019 | [Apri 1_ [To Balance bid 2,88,000) taunting idea Accountancy-Xili Output CGST Account Worteulere ee | late 9 2019 (ar. 31 [To Balance cid 1,19,620|Mar. 31 By Bank A/c. (Revenue) 410,520 1 [By Balance bd _ Dr. Output SGST Account |Particulars: \F. [Dato rarticulars: bor fpo19 (Mar. 31 |To Balance cid lBy Bank Alc (Revenue) [April 1__ [By Balance bid lage. 1 [To Bank Alc (Computers) |Mar.31 |To Bank (Expenses) Wor. 1__ [To Balance bid Dr. Input CGST Account [particulars be. ®)|Date [Particulars 18 2019 | 1 To Bank Ale (Furniture and Fixtures) 414,000 |Mar. 31. By Balance old 56,820 35,100 Dr. {Date [Particulars Particulars 18 c1 ToBank Ac (Furniture and Fixtures) 14,000Mar. 31 [By Balance old 58,820 1 |ToBank Nc (Computers) 35,100 19 31, [To Bank (Expenses) 9,720 _| 59,820 58,820, 1 [To Balance bid 58,820 Trial Balance Dr. asat 31st March, 2019 Cr. fee ‘©[Particuiare © 42,00,000|Capital Ac 11,12,000 Revenue from Membership Fees and Services Ate | 19,92,000 4,30,000 Bank Loan Ac 8,00,000 120,000 Etectricty Charges Payable Alc 424,000 4,000 Outstanding Salaries A/c 3,72,000 10,000 output CGS Ale 119,520) 34,000 Output SGST Ale 41,19,520 48,000 40,000 90,000 18,000] 2,20,000] 4,24,000 40,000 Project wanteyggo sansajetting Wages Alc 4,26,000) Salaries Ac 3,72,000| [Buildings Alc (Less depreciation) 3,80,000| ‘Cash Ae 40,000] Bank Alc 547,400} Computers Alc 3,90,000| input CGST Ale aaa Input SGST Ne sa,e20 Input GST Ale 2,88,000) [46 38,040) 46 30)040) Profit and Loss Account Dr. ‘for the year ending on 31st March, 2019 Cr. Particulars @)| Particulars ® To Purchases Ac 2,20,000 | By Revenue trom Membership Fees and 19,92,000 Services To Wages Alc 426,000 To Gross Profit od 16,46,000 19,9200 To Interest on Loan Ale 120,000 | By Gross Prof b/d 16,46,000 ‘To Telephone Expenses Ale 34,000 To Petty Expenses Alc 48,000 To Entertainment Expenses Alc 40,000 To Advertisement Expenses Ale 18,000 To Electricity Charges Ac 4,24,000 To Maintenance Ale 40,000 To Salaries 3,72,000 To Depreciation Ne: Machines ané Equipments 4,00,000 Buildings "20,000 Fumiture and Fixtures __ 10,000 4,30,000 To Net Profit 4,20,000 16.46,000 — 16 46,000. Balance Sheet as at 31st March, 2019 Liabilities Assets @ Captal +14,00,000, "Machines and Equipments (Lass depreciation) +12,00,000] Less: Drawings 2,88,000 Computers 3,90,000 11,12,000 Buildings (Less depreciation) 3,80,000] aid: Net Profit 420,000 16,32,000|Fumiture and Fixtures (Less depreciation) 20,000 Bank Loan £8,00,000|VSNL (security deposit 10,000) Electricity Charges Payable 4,24,000|lectrcity Board (security deposit) 4,000] idea Accountancy-Xll|odstanding Salaries 3,72,000]Cash in Hand 40,000 [Output CGST (1,19,520 - 58,820) 60,700] Bank 547,400 |Output SGST (1,19,520 ~ 58,820) 60,700| Input iGST 2,88,000| 23,49,400 [-29.49,400) Profitability Ratio: 1. Gross Profit Ratio = —___Gross Profit __ gg _ 21646000 , 199 ~ g9.63% Revenue from Operations 319.92,000 2. Net Profit Ratio = Net Profit __jgq = 420000 , 199 - 91.08% Revenue from Operations 219.92,000 Both the ratios are satisfactory. The bank will see the following ratios before granting the loan: 1. Current Ratio/Quick Ratio = Lutrent Assets / Quick Assets Current Liabilities = ——___Cash+ Bank llectricity Charges Payable +Outstanding Salaries = %587400 _ 1 19,1 %4,96,000 2. Debt-Equity Ratio _ Debt (Bank Loan) _ %8, 200 a Equity (Capital) %15,32,000 383 The bank, therefore, should grant the loan, as the ratios are favourable. The business operations are good since Gross Profit Ratio and Net Profit Ratio are higher than the ratios of similar business concerns, QL Ans. Q2 Ans. Q3. Ans. Qa Ans. Name the final accounts which are prepared by a sole proprietor? Following accounts are prepared by a sole proprietor as his final accounts: (1) Trading Account, (2) Profit and Loss Account, (3) Balance Sheet. What are books of accounts? The books in which business transactions are recorded are called books of accounts, Name the books of accounts. Journal, Ledger, Cash Book and Subsidiary books are few of the books of accounts. What are the objectives of Balance Sheet? (1) It shows whether the financial position of the business is strong or weak, (2) It determines the total amount of debtors. (8) It also reveals the total amount of creditors. (4) It determines the increase or decrease in capital. ©) It gives information about total assets and liabilities of the business, ‘What is Journalising? In doubie entry system, each transactionis to be recorded on debit as well as credit side. Thus, each transaction is recorded in the Journal after splitting into two aspects on the basis of vouchers or