COST MANAGEMENT ACCOUNTING ASSIGNMENT-2

SUBMITTED TO- Prof. Padmanava Mohapatra

SUBMITTED BY- Group 4

NAME REGD.NO SIGNATURE

Sarup Chatterjee PGDM/18-20/34

Sapna Saha PGDM/18-20/32

Sunil Kumar Rout PGDM/18-20/41

Priyanka Noor Bara PGDM/18-20/23

Jayadev Dalai PGDM/18-20/14

Debasis Padhy PGDM/18-20/08

Chinmaya Kumar Nayak PGDM/18-20/07
the business : As Shahid Nagar is slowly and steadily becoming the commercial Hub,
and Bhubaneswar is marching towards to being a smart city in the long run, Undertaking
new endeavour in the state of art and technology by observing the surroundings has
become the need of the hour. So after proper observation and analysis of the market, we
7 members decided to adopt a business relating to FMCG (Fast moving consumer
goods). We decided to open a bakery business at Shahid Nagar as it is a very favourable
business and location. Also the youth play a dominant role, having the greatest
purchasing power in today’s market. Food is a never ending necessity. It is one of those
sectors which will always remain profitable and will be ever growing. After looking at
the various aspects relating to a Bakery business, we decided to incorporate it. Opening a
bakery outlet isn’t a child’s play. There were lot of obstacles and hindrances which
needed to be sorted out within a short span of time. We had to invest in the land and
building where we were to operate our business. We had to get labour for the day to day
operation of the business. Manpower is key as we are dealing with food products which
need to be prepared nicely. We had to arrange surplus funds from our side and also take a
loan to start the business. This bakery business, as seen from other competitors, is a
really fruitful one. One might incur losses in short run but in the long run there is
abundance scope of expansion and growth from business perceptive. There are 9-10
competitors in the market and this will be an advantage for us as the sales will also be
high. However, it depends on the quality of goods. We also spent on the work area and
the designing of the floor area. We purchased the requisites for our business, and decided
to start working on 2nd of January, 2018.

These are the transactions of G7 Enterprise at its incorporation, a bakery selling outlet, as
on 1st January,2018.

DATE TRANSACTIONS RS.

1.1.18 Business started with a capital of 4,50,000
1.1.18 Took a loan from RaghuprasadParamguru 4,00,000
1.1.18 Opened an Account in Axis Bank 2,50,000
1.1.18 Introduced cash at bank 4,00,000
1.1.18 Paid rent by bank 60,000
1.1.18 Purchased kitchen equipment by bank 3,00,000
1.1.18 Miscellaneous expenses 40,000

G7 Enterprise

Balance Sheet
As on 2nd January 2018

Particulars Note.No Rs.

EQUITY AND LIABILITIES
Owner’s Funds
Capital 1 3,50,000
Non-current Liabilities
Loan 2 4,00,000
Current Liabilities
 Total 7,50,000
ASSETS
Non-current Assets
Tangible Assets 3 3,00,000
Current Assets
Cash 4 1,60,000
Bank 5 2,90,000
Total 7,50,000

Notes
Note. No 1:-
Capital
Opening Balance =Rs.4,50,000
Closing Balance= Rs.4,50,000(Opening Balance) – Rs.60,000(Rent)-
Rs.40,000(Miscellaneous Expenses)=Rs.3,50,000
Note. No 2:-
Loan
Opening Balance = Rs.4,00,000
Closing Balance = Rs.4,00,000
Note. No 3:-
Tangible Assets
Kitchen Equipment
Opening Balance = Rs.3,00,000
Closing Balance = Rs.3,00,000
Note. No 4:-
Cash
Opening Balance = Rs.4,50,000(Capital)
Closing Balance = Rs.4,50,000(Opening Balance)+ Rs.4,00,000(Loan From
Raghuprasad)-Rs.2,50,000(Bank)-Rs.4,00,000(Bank)-Rs.40,000(Miscellaneous
expenses)=Rs.1,60,000
Note. No 5:-
Bank
Opening Balance = Rs.2,50,000(Cash)
Closing Balance = Rs.2,50,000(Cash)+Rs.4,00,000(Cash)-Rs.60,000(Rent)-
Rs.3,00,000(Equipments)=Rs.2,90,000

G7 Enterprise
TRANSACTIONS FOR THE FIRST QUARTER - 2018
Date Sl.no Transactions Amount(Rs.)
03.01.18 1 Purchased ingredient 10,000
03.01.18 2 Purchased petis by cheque 20,000
03.01.18 3 Purchased Oven by cheque 15,000
03.01.18 4 Purchased cake mix for store 45,000
03.01.18 5 Purchased cake boxes and container 5000
05.01.18 6 Purchased waffles from Ashok Babu Enterprise in cash 25,000
10.01.18 7 Sold pastries on cash 25,000
12.01.18 8 Sold petis to Debi babu on credit 30,000
15.01.18 9 Received cash from Debi babu 20,000
31.01.18 10 G7 Enterprise gets long-term loan from Dena Bank 2,50,000
31.01.18 11 Paid rent 60,000
31.01.18 12 Paid salary by cash to support staff 8,000
31.01.18 13 Salary paid 7,000
31.01.18 14 Paid telephone Bill 5,000
31.01.18 15 Paid electricity Bill 10,000
03.02.18 16 Sold cakes and waffles 40,000
09.02.18 17 Sold cakes and waffles 30,000
12.02.18 18 Sold a box of cake in cash 10,000
21.02.18 19 Purchased a carat of Vadilal Ice-cream 40,000
21.02.18 20 Purchased cake mix for store 20,000
28.02.18 21 Paid rent 60,000
28.02.18 22 Paid salary by cash to support staff 8000
28.02.18 23 Salary paid 7000
28.02.18 24 Paid interest on Bank Loan 2500
28.02.18 25 Paid telephone Bill 4000
28.02.18 26 Paid electricity Bill 9000
03.03.18 27 Purchased work tables from Mahalaxmi Furniture by 30,000
cheque
07.03.18 28 Purchased 5 mixers from from Sai Electronics by cheque 20,000
10.03.18 29 Purchased an Invertor 40,000
15.03.18 30 Sold cakes and waffles 15,000
20.03.18 31 Sold Ice-cream in cash 20,000
31.03.18 32 Paid salary by cash to support staff 8000
31.03.18 33 Salary paid 7000
31.03.18 34 Paid telephone Bill 3000
31.03.18 35 Paid electricity Bill 9500
31.03.18 36 Paid Interest to Mr. RaghuprasadParamguru by cheque 12,000
31.03.18 37 Paid Interest on Bank Loan 2500

G7 Enterprise
ANALYSIS OF TRANSACTIONS
Date Two aspects of the transaction Accounts Category Rule Debit/
Credit
03.01.18 Purchased Ingredient Purchase Expense Increase Debit
Paid cash Cash Asset Decrease Credit
03.01.18 Purchased paties Purchase Expense Increase Debit
Paid by cheque Bank Asset Decrease Credit
03.01.18 Purchased Oven Oven Asset Increase Debit
Paid by cheque Bank Asset Decrease Credit
03.01.18 Purchased cake mix for store Purchase Expense Increase Debit
Paid cash Cash Asset Decrease Credit
03.01.18 Purchased cake boxes and Purchase Expense Increase Debit
 containers Cash Asset Decrease Credit
Paid cash
05.01.18 Purchased waffles Purchase Expense Increase Debit
Paid cash Cash Asset Decrease Credit
10.01.18 Sold Pastries Sales Income Increase Credit
Received cash Cash Asset Increase Debit
12.01.18 Sold Paties Sales Income Increase Credit
Supplied to Debi Babu Debi Babu Asset Increase Debit
15.01.18 Received Cash Cash Asset Increase Debit
Paid by Debi Babu Debi Babu Asset Increase Credit
31.01.18 Received cash Cash Asset Increase Debit
Provided by Dena Bank Bank Loan Liability Increase Credit
31.01.18 Paid rent Rent Expense Increase Debit
Paid cash Cash Asset Decrease Credit
31.01.18 Paid salary to support staff Salary Expense Increase Debit
Paid cash Cash Asset Decrease Credit
31.01.18 Paid salary to chefs Salary Expense Increase Debit
Paid cash Cash Asset Decrease Credit
31.01.18 Paid telephone Bill Telephone Expense Increase Debit
Paid cash Cash Asset Decrease Credit
31.01.18 Paid electricity Bill Electricity Expense Increase Debit
Paid cash Cash Asset Decrease Credit
03.02.18 Sold cakes and waffles Sales Income Increase Credit
Received cash Cash Asset Increase Debit
09.02.18 Sold cakes and waffles Sales Income Increase Credit
Received cash Cash Asset Decrease Debit
12.02.18 Sold a box of cake Sales Income Increase Credit
Received cash Cash Asset Increase Debit
21.02.18 Purchased a carat of Vaidilal Ice- Purchase Expense Increase Debit
cream
Paid cash Cash Asset Decrease Credit
21.02.18 Purchased cake mix for store Purchase Expense Increase Debit
Paid cash Cash Cash Decrease Credit
28.02.18 Paid rent Rent Expense Increase Debit
Paid cash Cash Asset Decrease Credit
28.02.18 Paid salary to support staff Salary Expense Increase Debit
Paid cash Cash Asset Decrease Credit
28.02.18 Salary paid to chefs Salary Expense Increase Debit
 Paid cash Cash Asset Decrease Credit
28.02.18 Paid interest on Bank Loan Interest Expense Increase Debit
Paid by bank Bank Asset Decrease Credit
28.02.18 Paid telephone Bill Telephone Expense Increase Debit
Paid cash Cash Asset Decrease Credit
28.02.18 Paid electricity Bill Electricity Expense Increase Debit
Paid cash Cash Asset Decrease Credit
03.03.18 Purchased work tables Furniture Asset Increase Debit
Paid by cheque Bank Asset Decrease Credit
07.03.18 Purchased 5 mixers Equipment Asset Increase Debit
Paid by cheque Bank Asset Decrease Credit
10.03.18 Purchased an Invertor Equipment Asset Increase Debit
Paid cash Cash Asset Decrease Credit
15.03.18 Sold cakes and waffles Sales Income Increase Credit
Received cash Cash Asset Increase Debit
20.03.18 Sold ice-cream Sales Income Increase Credit
Received cash Cash Asset Increase Debit
31.03.18 Paid salary to support staff Salary Expense Increase Debit
Paid cash Cash Asset Decrease Credit
31.03.18 Paid salary to chefs Salary Expense Increase Debit
Paid cash Cash Asset Decrease Credit
31.03.18 Paid telephone Bill Telephone Expense Increase Debit
Paid cash Cash Asset Decrease Credit
31.03.18 Paid electricity Bill Electricity Expense Increase Debit
Paid cash Cash Asset Decrease Credit
31.03.18 Paid interest to Mr.Raghuprasad Interest Expense Increase Debit
Paid by bank Bank Asset Decrease Credit
31.03.18 Paid interest to Dena Bank loan Interest Expense Increase Debit
Paid by bank Bank Asset Decrease Credit

JOURNAL ENTRIES
Date Particulars LF Amount in Amount in
Rs (Dr.) Rs (Cr.)
03.01.18 Dr…Purchase 10,000
Cr…Cash 10,000
03.01.18 Dr…Purchase 20,000
Cr…Bank 20,000
03.01.18 Dr…Oven 15,000
Cr…Bank 15,000
03.01.18 Dr…Purchase 45,000
Cr…Cash 45,000
03.01.18 Dr…Purchase 5000
Cr…Cash 5000
05.01.18 Dr…Purchase 25,000
Cr…Cash 25,000
10.01.18 Dr…Cash 25,000
Cr…Sales 25,000
12.01.18 Dr…Debi babu 30,000
Cr…Sales 30,000
15.01.18 Dr…Cash 20,000
Cr…Debi Babu 20,000
31.01.18 Dr…Cash 2,50,000
Cr…Bank Loan 2,50,000
31.01.18 Dr…Rent 60,000
Cr…Cash 60,000
31.01.18 Dr…Salary 8,000
Cr…Cash 8,000
31.01.18 Dr…Salary 7,000
Cr…Cash 7,000
31.01.18 Dr…Telephone 5,000
Cr…Cash 5,000
31.01.18 Dr…Electricity 10,000
Cr…Cash 10,000
03.02.18 Dr…Cash 40,000
Cr…Sales 40,000
09.02.18 Dr…Cash 30,000
Cr…Sales 30,000
12.02.18 Dr…Cash 10,000
Cr…Sales 10,000
21.02.18 Dr…Purchase 40,000
Cr…Cash 40,000
21.02.18 Dr…Purchase 20,000
Cr…Cash 20,000
28.02.18 Dr…Rent 60,000
Cr…Cash 60,000
28.02.18 Dr…Salary 8000
Cr…Cash 8000
28.02.18 Dr…Salary 7000
Cr…Cash 7000
28.02.18 Dr…Interest 2500
Cr…Bank 2500
28.02.18 Dr…Telephone 4000
Cr…Cash 4000
28.02.18 Dr…Electricity 9000
Cr…Cash 9000
03.03.18 Dr…Furniture 30,000
Cr…Bank 30,000
07.03.18 Dr…Equipment 20,000
 Cr…Bank 20,000
10.03.18 Dr…Equipment 40,000
Cr…Cash 40,000
15.03.18 Dr…Cash 15,000
Cr…Sales 15,000
20.03.18 Dr…Cash 20,000
Cr…Sales 20,000
31.03.18 Dr…Salary 8000
Cr…Cash 8000
31.03.18 Dr…Salary 7000
Cr…Cash 7000
31.03.18 Dr…Telephone 3000
Cr…Cash 3000
31.03.18 Dr…Electricity 9500
Cr…Cash 9500
31.03.18 Dr…Interest 12,000
Cr…Bank 12,000
31.03.18 Dr…Interest 2500
Cr…Bank 2500

LEDGER
Purchase A/C
Date Particulars JF Amount(Rs.) Balance
Dr. Cr. Dr./Cr. Amount(Rs.)
03.01.18 To cash 10,000 Dr. 10,000
03.01.18 To bank 20,000 Dr. 30,000
03.01.18 To cash 45,000 Dr. 75,000
03.01.18 To cash 5000 Dr. 80,000
03.01.18 To cash 25,000 Dr. 1,05,000
21.02.18 To cash 40,000 Dr. 1,45,000
21.02.18 To cash 20,000 Dr. 1,65,000

Cash A/C
Date Particulars JF Amount(Rs.) Balance
Dr. Cr. Dr./Cr. Amount(Rs.)

03.01.18 To Opening Balance 1,60,000 Dr. 1,60,000

03.01.18 By Purchase 10,000 Dr. 1,50,000
03.01.18 By Purchase 45,000 Dr. 1,05,000
03.01.18 By Purchase 5000 Dr. 1,00,000
05.01.18 By Purchase 25,000 Dr. 75,000
10.01.18 To Sales 25,000 Dr. 1,00,000
15.01.18 To Debi Babu 20,000 Dr. 1,20,000
31.01.18 To Bank Loan 2,50,000 Dr. 3,70,000
31.01.18 By Rent 60,000 Dr. 3,10,000
31.01.18 By Salary 8000 Dr. 3,02,000
31.01.18 By Salary 7000 Dr. 2,95,000
31.01.18 By Telephone 5000 Dr. 2,90,000
31.01.18 By Electricity 10,000 Dr. 2,80,000
03.02.18 To Sales 40,000 Dr. 3,20,000
09.02.18 To Sales 30,000 Dr. 3,50,000
12.02.18 To Sales 10,000 Dr. 3,60,000
21.02.18 By Purchase 40,000 Dr. 3,20,000
21.02.18 By Purchase 20,000 Dr. 3,00,000
28.02.18 By Rent 60,000 Dr. 2,40,000
28.02.18 By Salary 8000 Dr. 2,32,000
28.02.18 By Salary 7000 Dr. 2,25,000
28.02.18 By Telephone 4000 Dr. 2,21,000
28.02.18 By Electricity 9000 Dr. 2,12,000
10.03.18 By Equipment 40,000 Dr. 1,72,000
15.03.18 To Sales 15,000 Dr. 1,87,000
20.03.18 To Sales 20,000 Dr. 2,07,000
31.03.18 By Salary 8000 Dr. 1,99,000
31.03.18 By Salary 7000 Dr. 1,92,000
31.03.18 By Telephone 3000 Dr. 1,89,000
31.03.18 By Electricity 9500 Dr. 1,79,500

Bank A/C
Date Particulars JF Amount(Rs.) Balance
Dr. Cr. Dr./Cr. Amount

03.01.18 To Opening Balance 2,90,000 Dr. 2,90,000

03.01.18 By Purchase 20,000 Dr. 2,70,000
03.01.18 By Oven 15,000 Dr. 2,55,000
28.02.18 By Interest 2500 Dr. 2,52,500
03.03.18 By Furniture 30,000 Dr. 2,22,500
07.03.18 By Equipment 20,000 Dr. 2,02,500
31.03.18 By Interest 12,000 Dr. 1,90,500
31.03.18 By Interest 2500 Dr.
1,88,000

Oven A/C
Date Particulars JF Amount(Rs.) Balance
Dr. Cr. Dr./Cr. Amount
03.01.18 To Bank 15,000 Dr. 15,000
Sales a/c
Date Particulars JF Amount(Rs.) Balance
Dr. Cr. Dr./Cr. Amount
10.01.18 By Cash 25,000 Cr. 25,000
12.01.18 By Debi Babu 30,000 Cr. 55,000
03.02.18 By Cash 40,000 Cr. 95,000
09.02.18 By Cash 30,000 Cr. 1,25,000
12.02.18 By Cash 10,000 Cr. 1,35,000
15.03.18 By Cash 15,000 Cr. 1,50,000
20.03.18 By Cash 20,000 Cr. 1,70,000
Debi Babu a/c
Date Particulars JF Amount(Rs.) Balance
 Dr. Cr. Dr./Cr. Amount

12.01.18 To sales 30,000 Dr. 30,000

15.01.18 By Cash 20,000 Dr. 10,000
Bank Loan A/c
Date Particulars JF Amount(Rs.) Balance
Dr. Cr. Dr./Cr. Amount

31.01.18 By cash 2,50,000 Cr. 2,50,000

Rent A/c
Date Particulars JF Amount(Rs.) Balance
Dr. Cr. Dr./Cr. Amount

31.01.18 To Cash 60,000 Dr. 60,000

28.02.18 To Cash 60,000 Dr. 1,20,000

Salary a/c
Date Particulars JF Amount(Rs.) Balance
Dr. Cr. Dr./Cr. Amount(Rs.)

31.01.18 To Cash 8000 Dr. 8000

31.01.18 To Cash 7000 Dr. 15,000
28.02.18 To Cash 8000 Dr. 23,000
28.02.18 To Cash 7000 Dr. 30,000
31.03.18 To Cash 8000 Dr. 38,000
31.03.18 To Cash 7000 Dr. 45,000

Telephone A/c
Date Particulars JF Amount(Rs.) Balance
Dr. Cr. Dr./Cr. Amount(Rs.)

31.01.18 To Cash 5000 Dr. 5000

28.02.18 To Cash 4000 Dr. 9000
31.03.18 To Cash 3000 Dr. 12,000

Electricity a/c

Date Particulars JF Amount(Rs.) Balance

Dr. Cr. Dr./Cr. Amount(Rs.)

31.01.18 To Cash 10,000 Dr. 10,000

28.02.18 To Cash 9000 Dr. 19,000
31.03.18 To Cash 9500 Dr. 28,500

Interest a/c

Date Particulars JF Amount(Rs.) Balance

Dr. Cr. Dr./Cr. Amount(Rs.)

28.02.18 To Bank 2500 Dr. 2500

31.03.18 To Bank 12,000 Dr. 14,500
31.03.18 To Bank 2500 Dr. 17,000

Furniture a/c
Date Particulars JF Amount(Rs.) Balance
Dr. Cr. Dr./Cr. Amount(Rs.)

03.03.18 To Bank 30,000 Dr. 30,000

Equipment A/c

Date Particulars JF Amount(Rs.) Balance

Dr. Cr. Dr./Cr. Amount(Rs.)

02.01.18 To Opening Balance 3,00,000 Dr. 3,00,000

07.03.18 To Bank 20,000 Dr. 3,20,000
10.03.18 To Cash 40,000 Dr. 3,60,000

G7 Enterprise
 TRIAL BALANCE
As on 31.03.2018
Sl.n Name of Accounts L. Dr. (Rs.) Cr.(Rs.)
o F
1 Purchase 1,65,000
2 Cash 1,79,500
3 Bank 1,88,000
4 Oven 15,000
5 Debi Babu 10,000
6 Rent 1,20,000
7 Salary 45,000
8 Telephone 12,000
9 Electricity 28,500
10 Equipment 3,60,000
11 Furniture 30,000
12 Interest 17000
13 Sales 1,70,000
14 Bank Loan 2,50,000
15 Capital 3,50,000
16 Loan 4,00,000
Total 11,70,000 11,70,000

G7 Enterprise
ANALYSIS OF TRIAL BALANCE
 As on 31.03.2018
Sl.no Accounts Dr. (Rs.) Cr. (Rs.) Analysis of the Balance Allocation
1 Purchase 1,65,000 Total purchases for the quarter SPL
2 Cash 1,79,500 Cash in hand at the end of the BS
quarter
3 Bank 1,88,000 Bank balance at the end of the BS
quarter
4 Oven 15,000 Value of oven at the end of the BS
quarter
5 Debi Babu 10,000 Value of debtors at the end of the BS
quarter
6 Rent 1,20,000 Expense incurred in rent for the SPL
quarter
7 Salary 45,000 Expense incurred in salary for the SPL
quarter
8 Telephone 12,000 Total telephone bill for the quarter SPL
9 Electricity 28,500 Total Electricity bill for the SPL
quarter
10 Equipment 3,60,000 Value of equipment at the end of BS
the quarter
11 Furniture 30,000 Value of furniture at the end of the BS
quarter
12 Interest 17,000 Total interest paid for the quarter SPL
13 Sales 1,70,000 Income earned by sales for the SPL
quarter
14 Bank Loan 2,50,000 Amount payable to Axis bank at BS
the end of the quarter
15 Capital 3,50,000 Capital at the end of the quarter BS
16 Loan 4,00,000 Amount payable to BS
Mr.RaghuprasadParamguru at the
end of the quarter
11,70,000 11,70,000

G7 Enterprise
STATEMENT OF PROFIT & LOSS
For the quarter ended 31.3.18
Particulars Note.No Amount(Rs.) Amount(Rs.)
For the current For the previous
quarter quarter
INCOME
Sales/Revenue from 7 1,70,000 -
operations
Other Income - -
Total 1,70,000 -
EXPENSES
Cost of goods sold 8 1,65,000 -
Manufacturing - -
expenses
Operating expenses 9 2,05,500 -
Financial charges 10 17,000 -
Total 3,87,500 -

Profit (2,17,500) -

G7 Enterprise
BALANCE SHEET
As on 31.3.18
Particulars Note.No (Rs.)Figures for the (Rs.)Figures for the
current quarter previous quarter
 EQUITY AND LIABILITIES
Owner’s funds
Capital 1 1,32,500 -
Non-Current Liabilities
Loan Funds 2 6,50,000 -
Current Liabilities - -
Total 7,82,500 -
ASSETS
Non-Current Assets
Fixed Assets -
Tangible assets 3 4,05,000 -
Current Assets -
Cash 4 1,79,500
Bank 5 1,88,000
Receivables 6 10,000
Total 7,82,500

Notes

Note No. 1

Capital – Opening Balance (3.1.2018) Rs.3,50,000- Rs.2,17,500(Loss) = Rs.1,32,500

Note No. 2

Loan Funds –

 Loan from Axis Bank – Rs.2,50,000

 Loan from Mr.RaghuprasadParamguru – Rs.4,00,000

Total – Rs.6,50,000

Note No. 3

Tangible Assets

 Equipment – Opening Balance (3.1.2018)

Rs.3,00,000+Rs.20,000(Cash)+Rs.40,000(Bank)= Rs.3,60,000
 Oven – Rs.15,000(Bank)
 Furniture – Rs.30,000(Bank)

Total – Rs.4,05,000
Note No. 4

Cash- Opening Balance (3.1.2018) – Rs. 1,60,000 – Rs.1,45,000(Total Purchases) +

1,60,000(Total cash sales) + Rs.2,50,000(Bank Loan) – Rs.1,20,000(Rent)-
Rs.45,000(Salary)-Rs.12,000(Telephone)-Rs.28,500(Electricity)-Rs.40,000(Equipment)
= Rs.1,79,500

Note No. 5
Bank –Opening Balance(3.1.2018) – Rs.2,90,000 - Rs.20,000(Purchases)-
Rs.15,000(Oven)-Rs.17,000(Interest)-Rs.30,000(Furniture)-Rs.20,000(Equipment) =
Rs.1,88,000

Note No. 6

Receivables – Rs.10,000(Debi Babu)

Note No. 7

Revenue from operations – Sales – Rs.30,000(Credit Sale) + Rs. 1,40,000(Cash sales)=

Rs.1,70,000

Note No. 8

Cost of Goods Sole – Purchases – Total cash purchases = Rs.1,65,000

Note No. 9
Operating Expenses – Rs.1,20,000 (Rent) + Rs.12,000(Telephone) + Rs.
28,500(Electricity) + Rs. 45,000(Salary)= Rs.2,05,500

Note No. 10

Financial Charges – Rs.5000(2 months interest on Axis Bank Loan) + Rs.12,000(3

months interest on Mr.RaghuprasadParamguru’s loan)= Rs.17,000
COMMENTS ON FINANCIAL STATEMENTS

 Debt funds are profoundly higher than owner funds. Aggressive financing from debts
is found in the enterprise. This may result in volatile earnings in future. It could lead
to bankruptcy.
 There is a huge risk on the owners for the repayment of the loans.
 A Bank a/c is opened at the beginning of the month but further only few banking
transactions are found.
 Mostly, the business is running through cash operations.
 Slowly the business should adopt online banking transactions to meet purchases and
other expenses.
 Banking operations will make the business visible and organised.
 Business is at the completion of it’s first quarter. It is seen that the revenue generation
is really less in comparison with the expenses.
 Huge expenses are being incurred on rent and purchases.
 The owners should hire a marketing professional to pump up the sales.
 Profit on purchases margin is very low. The business needs to increase it’s purchases
and sales volume.
 The business needs lump-sum scale operations.
 Proper marketing and costing strategies should be adopted.
 Since it’s a one time investment in fixed assets, more working capital is required.
 The business could adopt a tie-up with railways or airlines to boost up it’s revenue.
 There should be more capital contribution from the owners.
 Insolvency can be avoided if the scale of operations is doubled/tripled.