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All Figures in - 000

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Karthikeyan Ramamoorthy
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421 views4 pages

All Figures in - 000

Uploaded by

Karthikeyan Ramamoorthy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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TENDULYA1

Sachin Tendulkar started a new sports gear store on 1 January 2014 after his retirement
from international cricket. He decided to name his firm by his nick name, ‘Tendulya’. Sachin
invested 8,000 from his personal savings. The amount was used to buy machinery worth
2,000, furniture worth 1,200 and inventory worth 1,400. Sachin estimated the life of the
machinery and furniture to be 5 years and 3 years respectively and the salvage value to be
nil in both the cases. He also leased a building for two years on 1 January 2014 by paying
a non-refundable security deposit of 400. The monthly rent was 50 per month. As per the
rent agreement, rent for six months (from 1 Jan to 30 June) has to be paid in advance. He
borrowed 4,000 from his friends and relatives for a period of one year. The loan amount
along with interest of 10% p.a. was to be repaid at the end of 1 year. On the same day, he
bought a comprehensive insurance policy by paying 1,600. The insurance was valid for one
year.

Question 1: Prepare the balance sheet of ‘Tendulya’ as on 1 January 2014 in the attached
format.

Sachin was very happy with his operations. At the end of three months, he decided to
appraise the financial performance of the first three months. Sachin’s accountant has been
maintaining a record of all cash receipts and payments made during the period, a summary
of which is below:

Cash Receipts
Cash sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
Amount received from customers to whom goods were sold on credit 4,000
Sale of scrap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600
Cash Payments
Additional purchase of inventory (excluding purchase on 1 Jan, 2014) 8,000
Salary (January and February) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200
Advance Tax 500
Drawings-Sachin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200

His accountant also shared the following additional information. The salary for the month
of March amounting to 600 was not paid as of 31 March 2014. In mid-February, Sachin’s
son Arjun had taken one bat whose cost price was 50. The closing stock of inventory as
of 31 March 2014 was 500. While all the purchases were on cash, total credit sales during
the period were 5,200. On 31 March 2014, Sachin sold the entire furniture for 800. Sachin
decided to create a provision equal to 10% of the closing accounts receivable. The income
tax rate applicable to the firm is 30% of the taxable income. As per his tax accountant, his
taxable income for the quarter was 2,000.

Question 2: Sachin has sought your help in preparing the income statement for the
three months period ending on 31 March 2014 and balance sheet as on 31 March 2014 in
the attached format.

1
All figures in | 000.

1
Tendulya

Balance Sheet as at 1 January 2014

Liabilities & Equity Amount Assets Amount


Tendulya

Income statement for the period 1 January 2014 to 31 March 2014

Revenues Amount

Expenses

Profit before tax

Profit after tax


Tendulya

Balance Sheet as at 31 March 2014

Liabilities & Equity Amount Assets Amount

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