Q6.

Prepare a balance sheet as of 31st December 2006 for Peninsular Transport

Company

PENINSULAR TRANSPORT
COMPANY
Assets (Amount in Rs) Liabilities and Owner's Equity
Current liabilities and
Current Assets:   Provision:  

Cash 10,000 Accounts payable 3,60,000

Hire purchase payment
Cash at Bank 90,000 due in one year 6,00,000
Bonus payable to
Promissory notes 30,000 employees 2,12,000
1
Accounts Receivable 3,00,000 Total current Liabilities 1,72,000
Advance to
employees 6,000    
Office supplies
inventory 3,000 long term liabilities  
Prepaid insurance & 1
licence 8,000 Hire purchase payable 4,00,000
Prepaid rent 1,00,000    
Inventory of diesel 60,000 Capital  

Spare parts inventory 13,000 Owners capital 6,00,000

Total current assets 6,20,000 Net income for the year 2,08,000
Plant and Equipment   Less: owners drawings 1,00,000
Trucks 32,00,000    
less: Accumulated
Depreciation 6,40,000    
Motor Car 1,00,000    
Total Liabilities & 3
TOTAL assets 32,80,000 Capital 2,80,000
 Q2. Financial position of Ani Initiative after each transaction.

Assumptions:

1. Internet installation fees is treated as an expense and not an advance.

2. Internet bill is always realized as an expense and not as an advance.

3. Transaction where ticket is bought by Ani for Bhola is discarded.

1. 11 December 06: Ani gives Bhola Rs.66000 to start the Bangalore office of Ani
Initiatives (part of Rs.1 lakh capital).

Using business entity principle we have:

Position Statement as on 11 December 06

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 66000   Capital 66000  
       
       
   
Total Assets 66000   Total Liabilities & Owner's Equity 66000  

2. 11 December 06: Ani purchases railway tickets for Bhola to Bangalore worth Rs.
1000.

Position Statement as on 11 December 06

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 66000   Capital 66000  
       
       
   
Total Assets 66000   Total Liabilities & Owner's Equity 66000  

3. 12 December 06: Compaq Presario Laptop purchase for Bangalore office worth
Rs. 55110 from De-mart computers (Receipt no 333). Using property rights and
monetary expression in accounts we have:

Position Statement as on 12 December 06

Assets Liabilities & Owner's Equity

Current Assets   Owner's Equity  
Cash 10890   Capital 66000  
Fixed Assets      
Computers 55110      
       
Total Assets 66000   Total Liabilities & Owner's Equity 66000  

4. 12 December 06: Computer accessories purchased worth Rs 416 from De-mart

Computers (Receipt no 335).Using property rights and monetary expression in
accounts we have:

Position Statement as on 12 December 06

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 10474   Capital 66000  
Fixed Assets      
Computers 55110      
Computer Accessories 416      
Total Assets 66000   Total Liabilities & Owner's Equity 66000  

5. 13 December 06: Ani gives Bhola Rs. 8000 to start the Bangalore Office of Ani
Initiatives. Using business entity principle we have:

Position Statement as on 13 December 06

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 18474   Capital 74000  
Fixed Assets      
Computers 55110      
Computer Accessories 416      
Total Assets 74000   Total Liabilities & Owner's Equity 74000  

6. 13 December 06: purchased HP printer for office worth Rs. 7999 from De-mart
Computers (Receipt no 395). Using property rights and monetary expression in
accounts we have:

Position Statement as on 13 December 06

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 10475   Capital 74000  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 8415      
Total Assets 74000   Total Liabilities & Owner's Equity 74000  

7. 13 December 06: Computer accessories worth Rs. 3107 from De-mart Computers
(Receipt no 395) .Using property rights and monetary expression in accounts we
have:

Position Statement as on 13 December 06

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 7368   Capital 74000  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
Total Assets 74000   Total Liabilities & Owner's Equity 74000  

8. 13 December 06: Bhola’s monthly salary Rs. 1000 paid. Using monetary
expression in accounts we have:

Position Statement as on 13 December 06

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 6368   Capital 74000  
Fixed Assets   Reserves and Surplus -1000  
Computers 55110      
Computer Accessories &
Devices 11522      
Total Assets 73000   Total Liabilities & Owner's Equity 73000  
 9. 16 December 06: Internet connection installation fees worth Rs. 1000 from Tata
Indicom broadband. Using monetary expression in accounts we have:

Position Statement as on 16 December 06

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 5368   Capital 74000  
    Reserves and Surplus -2000  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 72000   Total Liabilities & Owner's Equity 72000  
10. 16 December 06: Internet Connection to Tata Indicom broadband Rs. 2000. Using
monetary expression in accounts we have:

Position Statement as on 16 December 06

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 3368   Capital 74000  
Advances 2000   Reserves and Surplus -2000  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 72000   Total Liabilities & Owner's Equity 72000  

11. 22 December 06: Ani gives Bhola Rs. 27000 as part of Ani Initiatives. Using
concept of Business Entity

Position Statement as on 22December 07

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 30368   Capital 101000  
Advances 2000   Reserves and Surplus -2000  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 99000   Total Liabilities & Owner's Equity 99000  

Position Statement as on 25 December 06

 Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 28868   Capital 101000  
Advances 2000   Reserves and Surplus -3500  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 97500   Total Liabilities & Owner's Equity 97500  
12. 25 December 06: Bhola is paid extra salary for completion of data entry of YFA
project Rs. 1500. . Using monetary expression in accounts we have:
13. 31 December 06: Internet Bill paid to Tata Indicom Broadband Rs. 850 (Bill no
DSL/14638). Using monetary expression in accounts we have:

Position Statement as on 31 December 06

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 28018   Capital 101000  
Advances 2000   Reserves and Surplus -4350  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 96650   Total Liabilities & Owner's Equity 96650  

14. 31 December 06: Bhola’s monthly salary Rs. 1000 paid. Using monetary
expression in accounts we have:

Position Statement as on 31 December 06

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 27018   Capital 101000  
Advances 2000   Reserves and Surplus -5350  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 95650   Total Liabilities & Owner's Equity 95650  

15. 2 January 07: Internet Bill paid to Tata Indicom Broadband Rs. 850 (Bill no
DSL/15739). Using monetary expression in accounts we have:
 Position Statement as on 2 January 07
Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 26168   Capital 101000  
Advances 2000   Reserves and Surplus -6200  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 94800   Total Liabilities & Owner's Equity 94800  

16. 30 January 07: Ani gives Bhola Rs. 15000 to increase capital to Rs. 115000 of Ani
Initiatives. The concept used here is Business Entity.

Position Statement as on 30 January 07

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 41168   Capital 116000  
Advances 2000   Reserves and Surplus -6200  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 109800   Total Liabilities & Owner's Equity 109800  

17. 31 January 07: Bhola’s monthly salary Rs. 2000 paid. Using monetary expression
in accounts we have:

Position Statement as on 31 January 07

 Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 39168   Capital 116000  
Advances 2000   Reserves and Surplus -8200  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 107800   Total Liabilities & Owner's Equity 107800  

18. 2 February 07: Internet Bill paid to Tata Indicom Broadband Rs. 850 (Bill no
DSL/18291). Using monetary expression in accounts we have:

Position Statement as on 2 February 07

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 38318   Capital 116000  
Advances 2000   Reserves and Surplus -9050  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 106950   Total Liabilities & Owner's Equity 106950  

19. 4 February 07: Income earned from portfolio consultancy Rs. 9500. Using
matching concept and monetary expression in accounts we have:
 Position Statement as on 4 February 07
Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 47818   Capital 116000  
Advances 2000   Reserves and Surplus 450  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 116450   Total Liabilities & Owner's Equity 116450  

20. 5 February 07: Internet Bill paid to Tata Indicom Broadband Rs. 850 (Bill no
DSL/19893) Using property rights and monetary expression in accounts we have:

Position Statement as on 5 February 07

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 46968   Capital 116000  
Advances 2000   Reserves and Surplus -400  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 115600   Total Liabilities & Owner's Equity 115600  

21. 07 February 07: Commodities market training fee Rs. 15000 to Bhola (Receipt
no 1637) Using monetary expression in accounts we have:

Position Statement as on 7 February 07

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
 Cash 31968   Capital 116000  
Advances 2000   Reserves and Surplus -15400  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 100600   Total Liabilities & Owner's Equity 100600  

22. 15 February 07: Travel expenses of Rs. 1500 to Bhola. Using monetary expression
in accounts we have:

Position Statement as on 15 February 07

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 30468   Capital 116000  
Advances 2000   Reserves and Surplus -16900  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 99100   Total Liabilities & Owner's Equity 99100  

23. 21 February 07: Bhola’s monthly salary Rs. 1000 paid. . Using monetary
expression in accounts we have:

Position Statement as on 21 February 07

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 29468   Capital 116000  
Advances 2000   Reserves and Surplus -17900  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 98100   Total Liabilities & Owner's Equity 98100  

24. 22 February 07: Internet Bill paid to Tata Indicom Broadband Rs. 850 (Bill no
DSL/21542) Using monetary expression in accounts we have:

Position Statement as on 22 February 07

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 28618   Capital 116000  
Advances 2000   Reserves and Surplus -18750  
Fixed Assets      
Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 97250   Total Liabilities & Owner's Equity 97250  

25. 23 February 07: Commodities market training fee Rs. 500 to Bhola (Receipt no
1183). Using monetary expression in accounts we have:

Position Statement as on 23 February 07

Assets Liabilities & Owner's Equity
Current Assets   Owner's Equity  
Cash 28118   Capital 116000  
Advances 2000   Reserves and Surplus -19250  
Fixed Assets      
 Computers 55110      
Computer Accessories &
Devices 11522      
       
Total Assets 96750   Total Liabilities & Owner's Equity 96750  

26. 26 February 07: Ani Initiatives accepts business from Avinash, takes an advance
of Rs. 9000 for research data tabulation. Using monetary expression in accounts
we have:

Position Statement as on 26 February 07

Assets Liabilities & Owner's Equity
Current Assets   Liabilities  
Cash 37118   Sundry Creditors 9000  
Advances 2000    
Fixed Assets   Owner's Equity  
Computers 55110   Capital 116000  
Computer Accessories &
Devices 11522   Reserves and Surplus -19250  
       
Total Assets 105750   Total Liabilities & Owner's Equity 105750  

27. 28 February07: Bhola’s monthly salary Rs. 2000 paid. Using monetary expression
in accounts we have:

Position Statement as on 28 February 07

Assets     Liabilities & Owner's Equity    
Current Assets   Current Liabilities  
Cash 35118   Sundry Creditors 9000  
Advances 2000    
Fixed Assets   Owner's Equity  
 Computers 55110   Capital 116000  
Computer Accessories & Devices 11522   Reserves and Surplus -21250  
       
Total Assets 103750   Total Liabilities & Owner's Equity 103750  

28. 1 March 07: Ani gives a loan of Rs. 15000 to Ani Initiatives. Using monetary
expression in accounts we have:

Position Statement as on 1 March 07

Assets Liabilities & Owner's Equity
Current Assets   Current Liabilities  
Cash 50118   Sundry Creditors 9000  
Advances 2000   Loans 15000  
Fixed Assets   Owner's Equity  
Computers 55110   Capital 116000  
Computer Accessories &
Devices 11522   Reserves and Surplus -21250  
       
Total Assets 118750   Total Liabilities & Owner's Equity 118750  

29. 2 March 07: Internet Bill paid to Tata Indicom Broadband Rs. 850 (Bill no
DSL/20430) Using monetary expression in accounts we have:

Position Statement as on 2 March 07

Assets Liabilities & Owner's Equity
Current Assets   Current Liabilities  
Cash 49268   Sundry Creditors 9000  
Advances 2000   Loans 15000  
Fixed Assets   Owner's Equity  
Computers 55110   Capital 116000  
 Computer Accessories &
Devices 11522   Reserves and Surplus -22100  
       
Total Assets 117900   Total Liabilities & Owner's Equity 117900  

30. 5 March 07: Income earned from portfolio consultancy Rs. 11400. Using
monetary expression in accounts and matching concepts we have

Position Statement as on 5 March 07

Assets Liabilities & Owner's Equity
Current Assets   Current Liabilities  
Cash 60668   Sundry Creditors 9000  
Advances 2000   Loans 15000  
Fixed Assets   Owner's Equity  
Computers 55110   Capital 116000  
Computer Accessories &
Devices 11522   Reserves and Surplus -10700  
       
Total Assets 129300   Total Liabilities & Owner's Equity 129300  

31. 5 March 07: Bhola gets portfolio incentive Rs. 5700 (cash paid). . Using monetary
expression in accounts we have:

Position Statement as on 5 March 07

Assets Liabilities & Owner's Equity
Current Assets   Current Liabilities  
Cash 54968   Sundry Creditors 9000  
Advances 2000   Loans 15000  
Fixed Assets   Owner's Equity  
Computers 55110   Capital 116000  
Computer Accessories &
Devices 11522   Reserves and Surplus -16400  
        
Total Assets 123600   Total Liabilities & Owner's Equity 123600  
Position Statement as on 10 March 07
Assets Liabilities & Owner's Equity
Current Assets   Current Liabilities  
Cash 58968   Sundry Creditors 9000  
Advances 2000   Loans 15000  
Fixed Assets   Owner's Equity  
Computers 55110   Capital 116000  
Computer Accessories &
Devices 11522   Reserves and Surplus -12400  
       
Total Assets 127600   Total Liabilities & Owner's Equity 127600  

31. 10 March 07: Income earned from portfolio consultancy Rs. 4000. . Using
monetary expression in accounts

32. 10 March 07: Bhola gets portfolio incentive Rs. 2000 (cash paid) .Using monetary
expression in accounts we have:

Position Statement as on 10 March 07

Assets Liabilities & Owner's Equity
Current Assets   Current Liabilities  
 Cash 56968   Sundry Creditors 9000  
Advances 2000   Loans 15000  
Fixed Assets   Owner's Equity  
Computers 55110   Capital 116000  
Computer Accessories & Devices 11522   Reserves and Surplus -14400  
       
Total Assets 125600   Total Liabilities & Owner's Equity 125600  

33. 10 March 07: Income billed from portfolio consultancy Rs. 10600 to Gopal. Using
monetary expression in accounts we have:

Position Statement as on 10 March 07

Assets Liabilities & Owner's Equity
Current Assets   Current Liabilities  
Cash 56968   Sundry Creditors 9000  
Advances 2000   Loans 15000  
Sundry Debtors 10600   Owner's Equity  
Fixed Assets   Capital 116000  
Computers 55110   Reserves and Surplus -3800  
Computer Accessories &
Devices 11522    
       
Total Assets 136200   Total Liabilities & Owner's Equity 136200  

34. 24 March 07: Payment received from Gopal worth Rs. 10600. Using monetary
expression in accounts and matching concepts we have:

Position Statement as on 24 March 07

Assets Liabilities & Owner's Equity
Current Assets   Current Liabilities  
Cash 67568   Sundry Creditors 9000  
Advances 2000   Loans 15000  
    Owner's Equity  
Fixed Assets   Capital 116000  
Computers 55110   Reserves and Surplus -3800  
Computer Accessories &
Devices 11522    
        
Total Assets 136200   Total Liabilities & Owner's Equity 136200  

35. 24 March 07: Ani Initiatives settles this amount with the loan balance of Ani Rs.
10600. Using monetary expression in accounts we have:

Position Statement as on 24 March 07

Assets Liabilities & Owner's Equity
Current Assets   Current Liabilities  
Cash 56968   Sundry Creditors 9000  
Advances 2000   Loans 4400  
    Owner's Equity  
Fixed Assets   Capital 116000  
Computers 55110   Reserves and Surplus -3800  
Computer Accessories &
Devices 11522    
       
Total Assets 125600   Total Liabilities & Owner's Equity 125600  

36. 31 March 07: Bhola’s monthly salary Rs. 2000 paid. Using monetary expression
in accounts we have:

Position Statement as on 31 March 07

Assets Liabilities & Owner's Equity
Current Assets   Current Liabilities  
Cash 54968   Sundry Creditors 9000  
Advances 2000   Loans 4400  
    Owner's Equity  
Fixed Assets   Capital 116000  
Computers 55110   Reserves and Surplus -5800  
Computer Accessories &
Devices 11522    
       
Total Assets 123600   Total Liabilities & Owner's Equity 123600  

37. 31 March 07 Depreciation. Using monetary expression in accounts we have:

Position Statement as on 31 March 07

Assets Liabilities & Owner's Equity
Current Assets   Current Liabilities  
Cash 54968   Sundry Creditors 9000  
Advances 2000   Loans 4400  
    Owner's Equity  
Fixed Assets   Capital 116000  
Computers 55110   Reserves and Surplus -25790  
Computer Accessories &
Devices 11522    
Less: Accumulated Depreciation 19990    
       
Total Assets 103610   Total Liabilities & Owner's Equity 103610  

Question 8.2: Did Ani Initiative make Profit or Loss. Do you suggest him to reconsider the
new business initiative?

Ani Initiative has made a loss of Rs. 25790.

We do not advise Ani to shut down her business. This is because of the following reasons:

1. The business has just started and would require some time to break even.
2. We can clearly see the increase in number of consultations provided by the company
in the period of February to March.
3. Also,initial expenses were only due to acquiring of fixed assets.
4. The company has spent money on training also which will be realized later.