Problem - 1 Mr. Ajit after completing his MBA, started his own trading in furniture business under the name Ajit Plywoods Private Limited. Company collected 10,00,000 in its bank account by issuing 100,000 equity shares of the face value of 10 each. Mr. Ajit subscribed for 50,000 Equity shares and his wife for 50,000 shares. Company has taken a premises to be used as shop cum warehouse on rental basis and paid rent of 2,40,000 for the first year. During the year company approached Punjab National Bank and has taken a loan of 10,00,000 @ 12% interest. Company has purchased a vehicle for 3,00,000 to be used for the business and other fixed assets of 1,00,000 and paid in full. Sale for the first year were of 16,00,000 where company received all the money from the customers and following expenses were incurred and paid Purchase of stock 12,00,000, Wages & Salaries 65,000, Electricity 10,000, Printing & stationery 10,000, Telephone & Broadband 9,000, Advertisement 75,000 and delivery expenses 32,000, During the year company paid 2,50,000 to the bank through installments out of which interest amount was 1,20,000 and principle Loan repayment 1,30,000. Depreciation charged at 20% on vehicle. Corporate Tax paid is @30%. a) Explain the capital expenditure and revenue expenditure involved in the first year of business. b) Explain the capital receipts and revenue receipts which are involved in the first year. c) Prepare Profit & Loss Account and Balance sheet of the company. Discuss various generally accepted accounting principles followed while preparing the Profit & Loss Account and Balance sheet.

Problem - 2 Neha and Priya have started a beauty parlour under a private company named Neha Beauty Parlour Private Limited by introducing equity capital of 1,20,000. Both started looking after the business as directors of the company. Along with parlour service, company has decided to keep cosmetic products for sale. Company has taken a shop cum office on rental basis. Company has also spent 40,000 on furniture and other equipments for the business. During the year company has incurred and paid for the following: Purchase of cosmetic material 25,000, Rent 60,000, Electricity and water 5,000, Creams and powder 4,000, Magazines and newspapers 5,000, salary 20,000, telephone expenses 2,000 and advertisement 8,000. During the year, company has generated income of 1,08,000 through parlour services and 35,000 through selling of cosmetic products. Depreciation charged @20 % on fixed assets and corporate tax paid @ 30%. Neha is claiming that since sufficient funds are available in the bank at the end of the year, Board should recommend dividend of 12,000 (10% on Capital). Advise the company by preparing Statement of Profit & Loss and Balance sheet for the first year.

Problem - 3 A manufacturing company started its activities in April, 2017 by introducing Equity capital of 100 lacs. Company has purchased various tangible fixed assets of 60 lacs and intangible assets such as softwares of 5 lacs. There was some extra space available and Company has given this space on rental basis to another Company. During the year company has purchased raw material of 48 lacs (one month credit), Purchase of stock in trade 8 lacs, Employee Benefit Expenses 10 lcas and other operating expenses of 32 lacs. Company has made investment in shares of HUL of 10 lacs. Sales achieved during the year 96 lacs ( one month credit ) and rent received 2 lacs. At the end of the year, Company has charged depreciation at 10% on tangible fixed assets and amortized 1 lac from intangible assets. At the end of the year i.e on 31st March, 2018, raw material lying in stores is of 5 lacs. Company has sold investment made in shares of HUL for 14 lacs. Corporate Tax paid at 30%. A Board Meeting is scheduled in the month of April, 2018 where Management is planning to discuss on the first years performance of the Company. You are requested to prepare Profit & Loss Account and Balance sheet of the company for the first year and calculate EBITDA/Sales, Operating Profit/Sales and PAT/Sales.

Problem - 4 Mr. Narayan and Mr. Nandan, after working for more than ten years in a software company started their own software company under the name Infosys Technologies Private Limited. Both contributed 1,00,000 each towards equity share capital. Company started its activities in April, 2017 and both started looking after the business as Directors of the company. Company executed agreement with an owner of premises and taken on rental basis an office and paid rent of 14,000. Company also paid 30,000 as deposit for the premises. Investment in servers and computers of 80,000. Salary paid to staff during the year was 42,000. During the year company deposited 50,000 with Canara Bank as short term deposit with interest rate @ 5%. During the year company completed three orders and booked sales of 1,50,000 and received payment from customers. At the end of the year on 31st March, 2018, the accountant informed them: - a) Rent paid 14,000 includes 5,000 for the next year. b) Interest accrued on deposits but not received is 2,000. c) Salary of 10,000 for the month of March is not yet paid. d) On 31st March, one customer has paid 10,000 as advance against his work order. e) Depreciation of 20,000 is to be charged on computers. f) Corporate Tax @30% paid on profits. Prepare Profit & Loss Account and Balance sheet of the company for the year 17-18.

Problem - 5 Mr. Rajnish, a Bachelor in Science and MBA in Marketing, started a small manufacturing unit near Pune by forming a private company in April, 2017. He and his six friends subscribed for 10,000 equity shares each of a nominal value of 10/- per share. totaling 70,000 equity shares of 10 each. Company paid formation expenses of 40,000 and amount shown in Profit & Loss Account as expenses. Company has also issued non convertible Debentures of 7,00,000 at 9% interest with a maturity period of 10 years. Company purchased a plot of 3,00,000 and has constructed a small factory building by spending 4,00,000. It was decided to use rental building for office which will be located in the central place of the city. After lot of enquiries and market survey company purchased and installed machinery of 3,00,000 and Furniture of 1,00,000 with immediate payment. In the beginning of the year, Company has purchased shares of TCS Ltd of 1,00,000. In the Board meeting held in March, 2018, Mr. Rajnath informed the other members about the revenue expenses for the year as Purchase of Material 11,50,000, Employee Benefit Expenses 1,00,000, Repairs & Maintenance 22,000, Power & Fuel 60,000, Rent for office building 1,20,000, Other operating expenses 4,60,000, Interest on Debentures paid 63,000. He further informed the members that all expenses are paid in full except 1,50,000. He showed happiness on the achievement of sales of 25,00,000 where all the money received from customers except one customer to whom goods of 2,75,000 were sold in March, 2018. On the basis of the useful life of the fixed assets of the company, depreciation @5% is charged on building and on Machinery and Furniture @10%. Information received from store department is that material lying in stores at the end of the year is 1,60,000. At the end of the year, Company has sold investment in shares of TCS for 1,70,000. Tax Department has informed that corporate tax @30% is paid. Mr. Rajnath has requested you to prepare Profit & Loss Account for the year ended on 31st March, 2018 and Balance sheet as on 31st March, 2018 and also to calculate different turnover ratios.