Mr Prem commenced business in electronic goods with a initial capital of Rs 1500000 Out of the said Rs - Accountancy - Introduction to Accounting

Question

Mr Prem commenced business in electronic goods with a initial
capital of Rs 1500000 Out of the said Rs 1500000 he paid Rs 1000000
towards purchase of goods He further spent Rs 200000 on furnishing
the shop and Rs 35000 for purchase of computer and printer Rs 10000
in yet to paid to the supplier of computer

He sold goods costing Rs 500000 for Rs 700000 in cash and
goods costing Rs 250000 for Rs 310000 on credit Goods sold on
credit for Rs 25000 were returned being defective These goods
costing Rs 20000 were returned to the supplier Looking into the
response he decided to trade in home appliances for Rs 800000 out
of which purchases of Rs 200000 were on credit

Due to earthquake 2 LCD Television costing Rs 50000 were
completely destroyed
Mr Prem received an insurance claim of Rs
30000

A Customer purchased goods costing Rs 225000 for Rs
300000 and was allowed a discount of Rs 15000 He was further
allowed discount of Rs 5000 for payment within agreed
time

He paid salary to shyam of Rs 55000, Rs 5000 yet to be
paid He insured the goods and paid insurance premium of Rs 10000
out of this Rs 5000 are for the next year Mr Prem withdrew Rs 30000
for his personal use

You are required to answer the following questions

01 What is the amount of the capital?
02 What is the amount of the fixed assets?
03 What is the amount of purchases?
04 What is the amount of long term
liabilities?
05 What is the amount current liabilities?
06 How much expenses incur during the year?
07 What is the amount of prepaid expenses?
08 What is the amount of outstanding expenses?
09 What is the income earned?
10 What is the amount due from debtors?
11 What is the amount due to creditors?
12 What is the value closing stock?
13 What is the amount of trade discount?
14 What is the amount of cash discount?
15 What is the amount of drawings?
16 What is the amount of sales return?
17 What is the amount of purchase return?

Saurabh Mehta · Accepted Answer

(1) Opening Capital = 15,00,000
(2) Fixed Assets = Building (Shop)+Computer & Printers
= 2,00,000 + 35,000 = 2,35,000
(3) Purchases = Purchases(total) - Purchase Returns - Loss of
purchases by Earthquake
= 10,00,000 + 8,00,000 - 20,000 - 50,000 = 17,30,000
(4) Long Term Liabilities = Nil
(5) Current Liabilities = Supplier of Computer and Printers+
Creditors(Net)
= 10,000 + 1,80,000(2,00,000 - 20,000)
= 1,90,000
(6) Expenses = Discount Allowed + Salary + Insurance Expenses +
Loss by Earthquake (Net)
= 5,000 + 60,000 + 5,000 + 20,000 (50,000 - 30,000)
= 90,000
(7) Prepaid Expenses = Prepaid Insurance
= 10,000
(8) Outstanding Expenses = Outstanding Salary
= 5,000
(9) Income Earned = Income earned on Sales of Goods
= Sale Price of Goods - Purchase Cost of Goods Sold
= 7,00,000+3,10,000+2,85,000 - 5,00,000-2,50,000-2,25,000 =
3,20,000
(10) Debtors = 3,10,000 + 2,85,000 - 25,000 = 5,70,000
(11) Creditors = 2,00,000 - 20,000 = 1,80,000
(12) Closing Stock = Opening Stock + Purchases(Net) -
Sales(Net)
= 0 + 17,30,000 -
12,70,000(7,00,000+3,10,000+2,85,000-25,000)
= 4,60,000
(13) Trade Discount = 15,000
(14) Cash Discount = 5,000
(15) Drawings = 30,000
(16) Sales Return = 25,000
(17) Purchases Return = 20,000