PGDM 2021-23

Q 1.On April 1, Avinash opened a shirt manufacturing & selling business. He completed the
following transactions during the month of April:
1. Invested Rs 150000 in the business. Rs 125000 deposited in Firm’s Bank Account.
2. Purchased 2 stitching machines for Rs 25000 each. Paid through Bank Transfer
3. Applied for a bank loan with SBI. The application was accepted and Firm received Rs
50000 from Bank.(Assume it to be a Secured Loan). Money transferred to Firm’s Bank
Account.
4. Purchased cloth materials, Buttons and collars for Rs 30000 on credit.
5. Purchased Packing material for Rs 10000. Paid in Cash.
6. Sold Shirts for Rs 25000.The cost for the same involves Rs 12000 for Cloth material etc
and Rs 3000 for Packing Material.
7. Sold Shirts for Rs 10000 on credit .The cost for the same involves Rs 4000 for Cloth
material etc and Rs 2000 for Packing Material.
8. Paid wages to Tailors Rs 5000.
9. Paid interest on bank loan Rs 1000.
10. Paid Electricity Charges Rs 2000.
11. Depreciate Machines for Rs 2000.

Assuming that there was no finished goods and WIP Inventory at the end of the month, develop
accounting equation for the above transactions for the month of April. Also prepare an Income
statement and Balance Sheet.

Q 2.On April 1, Anuj opened a Furniture manufacturing and selling shop in the main market of
his town. He completed the following transactions during the month of April:
1. Invested Rs 100000 in the business. Rs 90000 out of this amount were deposited in SBI
A/c No 34980.
2. Purchased molding, welding and other machines for Rs 35000 paid through Bank Draft.
3. Applied for a bank loan with SBI. The application was accepted and Firm received Rs
40000 from Bank in its Bank Account. (Assume it to be a Secured Loan)
4. Purchased steel pipes, wood and other materials for Rs 30000 on credit.
5. Sold Steel & wood furniture for Rs 35000.The cost for the same involves Rs 18000 for
Steel & Wood and Rs 3000 for other material. The amount was received through Cheque
which was cleared immediately.
6. Sold Steel & wood furniture for Rs 12000 on credit. The cost for the same involves Rs
4000 for Steel & Wood and Rs 2000 for other Material.
7. Paid wages Rs 5000 in cash.
8. Paid interest on bank loan Rs 1000.The amount was taken from the bank account.
9. Paid Electricity Charges Rs 2000 in cash.
10. Depreciate Machines for Rs 3000.
Develop accounting equation for the above transactions for the month of April. Also prepare an
Income statement and Balance Sheet.
Q 3. On January 1, 2013, Radhey Kishan set up interior décor company. The following
transactions took place during the first month:
a) Radhey Kishan invested Rs 50000 cash in Business as his capital. He borrowed this
money from his brother in law and agreed to pay him after one year.
b) He took a Bank Loan of Rs 25000 from SBI. An account was opened and loan amount
was deposited in the account. He deposited another Rs 30000 from his capital
contribution of Rs 50000 in the account.
c) Took an Office on Rent of Rs 10000/- per month. Till now he was operating from his
house. The rent for January is to be paid in full by the end of the month.
d) He spent Rs 10000 on furniture and related items. The payment was made in cash.
e) Purchased two computers along with software for Rs 50000 each on credit from one of
his friend. It was agreed that money will be paid after 6 months. Useful life of computers
is 2 years.
f) Contacted few customers and as a result, got 3 orders totaling Rs 39500. Received Rs
24000 in the month of January and rest is to be received in February.
g) Hired 2 assistants at the mid of the month. Salary @ Rs 5000 pm per assistant. For
January, each will be paid half month salary.
Analyze the impact of above transactions on Accounting Equation and prepare Income Statement
and Balance Sheet.

Q 4. On Sep 01, Salaam Beg from Aligarh started the business of manufacturing & selling
Aligarhi Locks. His transactions during the month of September were as follows:

1. Beg borrowed from his father Rs 10, 00,000 and invested in the Business as Capital. With
that, Beg Locks & Co. (BLC) came into existence. Out of this amount, Rs 750000 was
deposited in IDBI A/c No 56432.
2. Beg purchased Lock Manufacturing Machines for Rs 2, 40,000 paid through a Bank
Transfer. The expected useful lives for the machines are 4 years.
3. Beg also purchased locks manufacturing material for Rs 20000 paid through a Bank
Demand Draft.
4. Beg hired 3 locksmiths to manufacture locks on a salary of Rs 6000 p.m. payable by the
end of the month.
The production started and by the end of the first week, there was a stock of 100 locks ready
for sales. The material utilized for manufacturing these locks was of Rs 5000. Another Rs
5000 was spent on packing, freight and other charges. Entire stock was sold by 10 th of the
month for Rs 20000, all in cash. Beg was very enthusiastic with the response he received
from the market. He hired one salesman on a monthly salary of Rs 8000 payable by the end
of the month.
5. During rest of the month, sales were for Rs 186000. For this, Raw Material for Rs 41500
was consumed. These were procured and paid through Bank DD. No stock of Raw
Material is left.
6. Out of Rs 186000, Beg received Rs 120000 in cash which he deposited in Bank.
7. All employees were paid by the end of the month.
8. Depreciation was charged for one month on Lock Manufacturing Machines.
9. Beg also had to provide for tax @ 20% of Profit before Tax.

Develop accounting equation for the above transactions for the month of September. Also
prepare an Income statement and Balance Sheet.
Q 5. Kannan started Vogue Garments, a Firm selling readymade garments. Following
transactions took place in the first month. Show the impact of these transactions and prepare an
Income Statement and Balance Sheet.

1. Kannan invested cash in Firm’s capital, Rs 1500000. Amount deposited in Firm’s Bank
Account except Rs 200000.
2. Paid Refundable & Non-adjustable Rent deposit for shop premises Rs 50000 through Bank
Transfer.
3. Purchased Iron Racks and other furniture items from S K Furniture on cash Rs 35000.
4. Purchased stock of readymade garments from 3 manufacturers Rs 350000, paid through
Bank Transfer.
5. Applied for a Bank loan Rs 500000.
6. Spent Rs 5000 on procurement of electricity meter.
7. Spent Rs 20000 on purchase of Water Cooler.
8. Shop opens for business. Spent Rs 7500 on Opening ceremony & snacks. Hired two
assistants for Rs 10000 each.
9. Paid Rs 5000 for Tax & other regulatory registration.
10. Sold Garments worth Rs 35000 on cash. Stock of Rs 18000 consumed.
11. Spent Rs 1500 on Newspaper advertisement.
12. Sold Garments worth Rs 75000 on cash. Stock of Rs 44000 consumed.
13. Sold Garments on credit to a Retailer, Babbu Nath & Sons, Rs 150000. Stock of Rs 105000
consumed.
14. Paid rent for the month Rs 15000. Paid Electricity Bill Rs 3500. Paid Telephone Charges Rs
2000. Paid Salary.
15. Received Rs 95000 from Babbu Nath & Sons.