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Mr. Tushar started a computer business by setting up a computer cafe. He invested Rs. 2,00,000 to construct the cafe floor and Rs. 73,50,000 total. He took a loan for 75% of the cost of 12 computers at Rs. 40,000 each. The loan is to be repaid in 4 annual installments. In the first year of business, the cafe had revenues of Rs. 2,70,000 from computer classes, Rs. 2,20,000 from internet access, and Rs. 1,60,000 from computer supplies. Expenses included wages of Rs. 12,000, electricity of Rs. 48,000, and telephone of Rs. 73,

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Naman Gupta
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101 views2 pages

Adobe Scan Jan 15, 2022

Mr. Tushar started a computer business by setting up a computer cafe. He invested Rs. 2,00,000 to construct the cafe floor and Rs. 73,50,000 total. He took a loan for 75% of the cost of 12 computers at Rs. 40,000 each. The loan is to be repaid in 4 annual installments. In the first year of business, the cafe had revenues of Rs. 2,70,000 from computer classes, Rs. 2,20,000 from internet access, and Rs. 1,60,000 from computer supplies. Expenses included wages of Rs. 12,000, electricity of Rs. 48,000, and telephone of Rs. 73,

Uploaded by

Naman Gupta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PROJECT STATEMENT

business. For this purpose he hu:t


decided to start a computer
Mr. Tushar
tloor ofhis house at a cost of R2,00,000 and invested a further sum of 73.50 00irst
this
in
business.
40,000 cach. He approached
He wanted to start with 12 computers costing ICC.
ICI
Bank and secured a loan to the extent of 75% of the cost of computers. It was aoro
reed
that the loan will be repaid in four annual instalments as follows
At the end of First Year 790,000 +736,000 for interest
At the end of Second Year R90,000+ 727,000 for interest
At the end of Third Year 790,000 + 18,000 for interest
At the end of Fourth Year 790,000 + 7 9,000 for interest

He started business on lst April, 2017. On the same date he deposited 73,30,000o
in the Bank. He purchased Computers and paid 25% of the value ofcomputers from his
bank and 73,60,000 out of bank loan availed. He deposited 10,000 for the electric
connection with the Electricity Board and also deposited F1,50,000 with the VSNL for
internet and telephone connection.
He spent40,000 for getting the Computer Cafe furnished and also spent7 6,000
in getting the pamphlets printed and distributed.
All payments were to be made by cheques and all the receipts were to be deposited
in the bank on the same day.
At the end of the year, the results were:losst sii oldzaog9voTe
aneirSup gnolas vol loodae
Purchases of Computer stationery like floppy discs, CDs et. enime9 92,000
Revenue from fees received from students of Computer classes 2,70,000
Revenue on Account of Internet Facility 2,20,000
Revenue from sale of Computer Stationery alcobute d saob ho 1,60,000
Wages paid to Servant o forexo orda12,000
Electricity Charges bcws d iw hstealit rt o 48,000
Telephone Charges 73,000
Entertainment Expenses
General Expenses
7,000
5,200
He withdrew 5,000 by cheque each month for his
paid the bank loan. personal expenses and duly
You are required to
beessbns inabu
() Journalize the above transactions, post them into the
trial balance Ledger and prepare a
(i) Prepare Trading and Profit & Loss Account and Balance Sheet taking into
consideration that a telephone bill of T6,800 is yet to be paid.
(iii) Depreciate Building by 5%, furniture by 20% and computers by 30%.
(iv) Calculate profitability ratios and comment on the efficiency of the business if
the norms set for Gross Profit Ratio and Net Profit Ratio in similar type of
business enterprises are 60% and 25% respectively.
(v) Mr. Tushar wants to expand his business. He approached the bank for a further
loan. Compute the ratios that the bank manager will take into consideration
before granting the loan (Current ratio, Quick ratio and Debt Equity Ratio).

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