Journalize the following transaction in the books of Madhu.

Commenced business on 2024 Jan 1 with Rs

15,000. On 2nd Paid into ban k Rs 10,000; on 3rd Jan Purchased Goods from Balu Rs 2,000 and on 9th Jan Sold
goods for cash Rs 7,000

Date Particulars Dr Cr
( Amount) (Amount)
2024 Cash a/c Dr 15,000
Jan To Capital a/c 15,000
1 (being commenced business)
2 Bank a/c Dr 10,000
To Cash a/c 10,000
(being Cash deposited into Bank)
3 Purchases a/c Dr 2,000
To Balu a/c 2,000
(being goods purchased from Balu)
9 Cash a/c Dr 7,000
To Sales a/c 7,000
(being goods sold for cash)

Journalize the following and open ledger accounts:

a) Opening Balance of Cash Rs 15,000
b) Cash Purchases Rs 5,000
c) Credit Sales to Zubin Rs 18,000
d) Purchased Furniture Rs 2,000
e) Deposited Cash in Bank Rs 2,500
f) Paid Salary Rs 4,000, Rent Rs.3,000

Date Particulars Dr Cr
( Amount) (Amount)
1 Cash a/c Dr 15,000
To Capital a/c 15,000
(being commenced business)
2 Purchases a/c Dr 5,000
To Cash a/c 5,000
(being purchases for Cash)
3 Zubin a/c Dr
To Sales a/c 18,000 18,000
(being goods sold for credit)
4 Furniture a/c Dr 2,000
To Cash a/c 2,000
( being furniture purchased for cash)
5 Bank a/c Dr 2,500
To Cash a/c 2,500
(being cash deposited into bank)

6 Salary a/c 4,000

Ren a/c 3,000
To Cash a/c 7,000
(being salary and rent paid)
Find the Payback period, NPV for the following independent project. Which project are accepted under
each method? The discount rate in NPV is 15%
Years Prop M Prop N
0 -20,000 -20,000
1 10,000 -
2 10,000 -
3 10,000 30,000

Year PV Cash Discounted CF DCF

@15% Flows Cash Flows
1 0.869 10,000 8,690 - -
2 0.756 10,000 7,560 - -
3 0.658 10,000 6,580 30,000 19,740
22,830 22,530

B) From the following balances of Vikram Co. Prepare Trial Balance for the year ending March 31,
2023.
Purchases- 3,00,000; Wages-50,000; Sundry Creditors- Rs 60,000; Capital-3,02,000; Opening Stock-
Rs 20,000; BillsPayabe-15,000; Buildings-5,00,000; Sales-8,00,000; Furniture-15,000; Debtors-
60,000

Name of the Dr Cr
account (Rs) (Rs)
Purchases 3,00,000
Wages 50,000
Opening Stock 20,000
Sundry Creditors 3,00,000
Buildings 5,00,000
Furniture 15,000
Bills Payable 30,000
Sales 15,000
Debtors 6,00,000
Capital
60,000
9,45,000 9,45,000
On 1st March 2024 Mr Michael started business with a capital of Rs. 60,000 and on 2nd March deposited
into bank Rs. 30,000/- on 3rd Mar bought furniture from Gopal Furniture mart R. 2,000 and bought goods
worth Rs 48,000 from Kamal. Prepare necessary leger accounts in the books of Michael.t

Date Particulars Dr Cr
( Amount) (Amount)
2024 March 1 Cash a/c Dr 60,000
To Capital a/c 60,000
(being commenced business)
2nd Bank a/c Dr 30,000
To Cash a/c 30,000
(being cash deposited into bank)
3rd Furniture a/c Dr 2,000
To Gopal furniture Mart a/c 2,000
( being furniture purchased by credit)
3rd Goods (Purchases) a/c 48,000
To Kamal a/c 48,000
(being good purchased for credit)

Dr Cash Account Cr
1/3 To Cash a/c 60,000 2/3 By Bank a/c 30,000
31/3 By Bal c/d 30,000
60,000 60,000
1/4 To Bal b/d 30,000

Dr Capital Account Cr
31/3 To Bal c/da/c 60,000 1/3 By Cash a/c 60,000

60,000 60,000
1/4 By Bal b/d 60,000

Dr Bank Account Cr
1/3 To Cash a/c 30,000 31/3 By Bal c/d 30,000

30,000 30,000
1/4 To Bal b/d 30,000

Dr Furniture Account Cr
1/3 To Gopal 2,000 31/3 By Bal c/d 2,000
Furniture Mart a/c
2,000 2,000
1/4 To Bal b/d 2,000

Dr Purchases Account Cr
3/3 To Kamal a/c 30,000 31/3 By Bal c/d 48,000

48,000 48,000
1/4 To Bal b/d 48,000
Dr Gopal Furniture Mart a/c Cr
31/3 To Bal c/d 2,000 3/3 By Furniture a/c 2,000

2,000 2,000
2,000 1/4 By Bal b/d 2,000

Dr Kamal a/c Cr
31/3 To Bal c/d 48,000 3/3 By Purchases a/c 48,000

48,000 48,000
1/4 By Bal b/d 48,000
Problem: The Financial Manager of a company has to advise the board of directors on choosing
between two competing project proposals which require an equal investment of Rs. One lakh and
are expected to generate Cash flows as under:

Years Cash Flows I Cash Flows II

1 48,000 20,000
2 32,000 24,000
3 20,000 36,000
4 Nil 48,000
5 24,000 16,000
6 12,000 8,000
Assume cost of capital to be 10% p.a. Which project proposal should be recommended
and why?

Solution:
Year PV @10% Cash DCF Cash DCF
Flows-I I Flows-II II
1 0.909 48,000 43,632 20,000 18,180
2 0.826 32,000 26,432 24,000 19,824
3 0.751 20,000 15,020 36,000 27,036
4 0.683 - -- 48,000 32,784
5 0.621 24,000 14,904 16,000 9,936
6 0.564 12,000 6,768 8,000 4,512
Total DCF 1,06,756 1,12,272

Net Present Value = Total DCF- Original Investment

Project I = 1,06,756 - 1,00,000 = 6,756

Project II = 1,12,272 - 1,00,000 = 12,272
As the NPV of Project II is more i.e. Rs. 12,272; when compared to NPV of project I
(6,756) hence, Project II may be recommended which gives more return.

8. Prepare final accounts, for Priyanka for the year ended 31st March 2024 from the following
information.
Debit Balance(Rs.) Credit Balance (Rs.)
Cash in Hand a/c 4,500 -
Purchase a/c 10,500 -
Sales a/c - 15,000
Returns a/c 2,000 500
Opening Stock a/c 5,000 -
Carriage inwards a/c 1,000 -
Bad debts a/c 1,000 -
Rent a/c 4,000 -
Commission a/c 1,000 2,000
Discount a/c 2,000 1,500
Machinery a/c 10,000 -
Debtors a/c 9,000 -
Interest a/c 1,000 3,000
Creditors a/c - 1,000
Capital a/c - 27,000
Provision for Bab debts - 1,000
Total 51,000 51,000
Adjustment:
1. Closing Stock is Rs.15,000
2. Depreciate machinery at 10%
3. Outstanding Rent Rs200

Dr Trading Account Cr
To Opening Stock 5,000 By Sales 15,000
“ Purchases 10,500 Less: Returns 2,000 13,000
Less: Returns 500 10,000 “ Closing Stock 15,000
Carriage inwards 1,000
Gross Profit(BF) 12,000
28,000 28,000

Dr Profit and Loss Account Cr

To Rent ( +200 O/s) 4,200 By GP 12,000
“ Commission 1,000 “ Commission 2,000
“ Bad debts 1,000 “ Discount 1,500
“ Discount 2,000 “ Prov. for BD 1,000
“ Interest 1,000 “ Interest 3,000
“ Dep on Machinery 1,000
Net Profit(BF) 9,300
19,500 19,500

Dr Balance Sheet Cr
Capital 27,000 Machnry 10,000
Add: Net Profit 9,300 36,300 Less: Dep 1,000 9,000
Creditors 1,000 Debtors 9,000
Outstanding Rent 200 Closing Stock 15,000
Cash in Hand 4,500
37,500 37,500

9. Prepare final accounts, for Ramesh for the year ended 31st Dec 2023 from the following Trial Balance
.
Debit Balance(Rs.) Credit Balance (Rs.)
Cash in Hand a/c 5,000 -
Purchase a/c 55,000 -
Sales a/c - 1,50,000
Sales Returns a/c 2,000 -
Returns outwards a/c - 1,000
Carriage outwards a/c 2,000 -
Bank Overdraft - 30,000
Bad debts a/c 1,000 -
Opening Stock a/c 35,000 -
Buildings a/c 18,000 -
Furniture a/c 15,000 -
Bad debts a/c 1,000 -
Provision for Bab debts - 200
Salaries and wages a/c 3,000 -
Machinery a/c 50,000 -
Advertisement a/c 2,000 -
Interest a/c 1,000 3,000
Capital a/c - 25,800
Debtors a/c 31,000 -
Creditors a/c - 10,000
Total 2,20,000 2,20,000

Adjustment:
Closing Stock is Rs.32,000
Depreciate machinery at Rs. 1,000, buildings Rs 3,000 and Furniture Rs 1,000
Outstanding interest on overdraft Rs.1000
Trading Account of
Ramesh for the year ended 31st Dec 2023
Dr Cr
To Opening Stock 35,000 By Sales 1,50,000
“ Purchases 55,000 Less: Returns 2,000 1,48,000
Less: Returns 1,000 54,000 “ Closing Stock 32,000
Gross Profit(BF) 91,000
1,80,000 1,80,000

Profit and Loss Account of

Ramesh for the year ended 31st Dec 2023
Dr Cr
To Carriage outwards 2,000 By GP 91,000
“ Advertg exp 2,000 “ Interest 3,000
“ Interest (+1000 o/s) 2,000 “ Prov for BD 200
“ Salaries & Wages 3,000
“ Depreciation on
Machinery 1,000
Buildings 3,000
Furniture 1,000
“ Bad debts 1,000
Net Profit(BF) 79,200
94,200 94,200

Balance Sheet of
Ramesh for the year ended 31st Dec 2023
Capital 25800 Building 18,000
Add:Net Prof 79,200 1,05,000 Less: Dep 3,000 15,000
Creditors 10,000 Machnry 50,000
Bank Overdraft 30,000 Less: Dep 1,000 49,000
Outstanding Interest 1,000 Furniture 15,000
Less: Dep 1,000 14,000
Debtors 31,000
Closing Stock 32,000
Cash 5,000
1,46,000 1,46,000
 1. A company has fixed costs of ₹50,000 and a selling price of ₹20 per unit. The variable cost
per unit is ₹12. Find the break-even point in units and sales value.
2. A firm sells a product at ₹25 per unit, with a variable cost of ₹15 per unit. The total fixed
costs are ₹60,000. Calculate: (a) P/V Ratio (b) Break-even Sales (units) (c) Profit if
10,000 units are sold
3. A business has actual sales of ₹4,00,000 and a break-even sales of ₹3,00,000. Find the
margin of safety
4. A company has: Selling price per unit = ₹50; Variable cost per unit = ₹30 Fixed costs =
₹80,000
Find: (a) Contribution per unit (b) P/V Ratio and (c) Break-even sales (units & value)
5. A firm sells a product for ₹40 per unit. The variable cost per unit is ₹25, and the fixed
costs are ₹1,50,000. Calculate: (a) Break-even point in units (b) Sales required to earn a
profit of ₹50,000
6. A company produces a product with the following details:
• Selling price per unit = ₹100 Variable cost per unit = ₹60
• Fixed costs = ₹2,00,000 Actual sales = 6,000 units
Calculate: (a) Break-even sales (units & value) (b) Profit earned
7. A company currently sells 10,000 units and earns a profit of ₹40,000. The selling price per
unit is ₹20, and the variable cost per unit is ₹12. The fixed cost is ₹40,000. Calculate:
• (a) Break-even sales (units)
• (b) New break-even sales if fixed costs increase by ₹10,000
8. A firm has a P/V Ratio of 40% and fixed costs of ₹1,20,000.
• (a) Find the break-even sales value.
• (b) Find the required sales if the target profit is ₹50,000.
9. A company sells a product at ₹30 per unit. The break-even sales value is ₹3,00,000. The
variable cost per unit is ₹20. Find: (a) Contribution per unit ; (b) Total fixed cost (c)
Profit when sales are ₹5,00,000
10. From the following Sales and Profits of the two periods of a company Calculate :
(a) P/V Ratio (b) Contribution (b) Fixed Cost and (c) BEP
Year Profits Sales
2023 6,000 1,00,000
2024 10,000 1,20,000
[[

4,000
P/V Ratio = -----------x100 = 20% Contribution= Sales x P/VRatio = 24,000
20,000
Fixed Cost = Contribution-Profit = 14,000

1.A company has total sales of Rs 5 lakhs, Profit Rs 1 lakh, BE sales Rs 3.75 lakhs.
Calculate : a) P/V ratio, b) BE sales in units if selling price per unit is Rs 50/-

MOS = A Sales- B.E Sales = 5,00,000 -3,75,000 = 1,25,000

As MOS = Profit /PV Ratio Therefore P/v Ratio = Profit/MOS

1,00,000
a) P/V Ratio = -----------x100 = 80% b) 3,75,000/Rs 50 = 7,500 units
1,25,000

2. Sales 8,00,000; Contribution Rs 3,20,000; Profit 80,000 Find P/V Ratio and BE Sales

3,20,000
a) P/V Ratio = -----------x100 = 40% BEP = Fixed Cost/P/V Ratio
 8,00,000

FC = Contribution – Profit = 3,20,000-80,000 = 2,40,000

b) Therefore BE sales is 2,40,000/40% = Rs 6,00,000

3. If P/V Ratio is 40% earned profit is 60,000 on Sales Rs 3,00,000, Find BE sales and MOS?

Contribution = 3,00,000x40% = 1,20,000

Fixed Cost = Contribution- Profit = 1,20,000-60,000 = 60,000
Therefore BEP is 60,000/40% = 1,50,000 MOS = 3,00,000-1,50,000= 1,50,000

Accounting

The object of any business is to make profits. It may be a business engaged in the purchase
and sale of goods or it may be engaged in the production of goods or provision of services.
Whatever be it nature, the main object is to earn profits. A businessman enters into business in
order to earn profits.

A businessman starts his business with a certain amount of capital. He hires a shop for
rent; he equips his shop with showcases and furniture, etc. he buys goods either for cash or on
credit. He sells them ether for cash or on credit. In the course of his business he may have to
incur some expenses for carrying on his trade. Every day he has to pay cash to the suppliers of
goods or his employees or others who have rendered some services to him. Similarly he receives
cash form his customers and others. All these are called business transaction.

The world of business consists of countless business concerns. A business concern might
be owned by an individual or by a group of individuals or b the nation as a whole. The efficient
management of a business concerns is possible only when those who manage the business could
get from time to time correct information about their own activities. Bookkeeping is the system of
recording business activities for the purpose for providing reliable information to the owners and
managers about the state and prospects of the business concerns. The system of book keeping
could be described as a system of information,

Accountancy is a science because it has some objects. It is an art because it prescribes

the process through which the objects can be achieved. Accounting is the language of business.
Without Accounting information management functions cannot be performed effectively and
efficiently.
A systematic record of the daily events of a business leading to presentation of a complete
financial picture is known as Accounting or in its elementary stage as Bookkeeping.
It is an art of recording transactions in a systematic manner and it is a science of recording
transactions with appropriated accounts.
Preparing financial statements through the entering business transactions is accounting,
whereas showing the business transactions in detailed with amounts is accounts.

All types of accounts ae classified into personal, real and nominal accounts

Personal: The accounts which are related to persons and organizations ( Gopal a/c Andhra Bank)
Real: The accounts which are related to assets ( Cash a/c, Furniture a/c, Machinery/ Land a/c)
Nominal: The accounts which are related to expenses, losses and incomes and gains. ( Salaries
a/c, Rent a/c Interest a/c, Commission a/c, Discount a/c

Rules of Accounts:

1. Debit the receiver and Credit the giver

 2. Debit what comes in and Credit what goes out
3. Debit all expenses and losses, Credit all incomes and gains

4 stages of Accounting Cycle

4. Journal
5. Ledger
6. Trial Balance
7. Final Accounts

Journal: First book to enter business transactions is journal. It is the book of original entry or Day
Bool.it contains journal entries.
Journal Proforma

Date Particulars Dr Cr
( Amount) (Amount)
2024 March 1 Cash a/c Dr 60,000
To Capital a/c 60,000
(being commenced business)

Ledger: Second book is Ledger, it’s a bunch of accounts, ledger contains varous accounts. An
account is a T shaped form having to equal sides.

a) Transferring form Journal to ledger is posting

b) Finding out exact balances is balancing .

Dr Cash Account Cr
1/3 To Cash a/c 60,000 2/3 By Bank a/c 30,000
31/3 By Bal c/d 30,000
60,000 60,000
1/4 To Bal b/d 30,000

Dr Capital Account Cr
31/3 To Bal c/da/c 60,000 1/3 By Cash a/c 60,000

60,000 60,000
1/4 By Bal b/d 60,000