M3_T1: Caselet I

Ms. Richa Verma, the owner of Trendee Pvt. Ltd. engages in certain transactions during the Month of January . Please find them
mentioned below.

She starts the business with her savings and deposits Rs. 20,00,000, deposited in a bank (HDFC Bank), as initial capital on 1st
January 2021. She takes a new shop in Lajpat Nagar on rent for Rs. 20,000. She pays the rent in advance for the month of January
as Rs. 20,000 and two months’ rent as security deposit of Rs. 40,000. On 2nd January, she purchased furniture for Rs. 50,000 and 3
ACs for Rs. 1,50,000 and a computer for Rs. 25,000 from Softonics Ltd. She hires 3 employees on a salary of Rs. 20,000 each. She
withdraws Rs. 10,000 from HDFC bank for official use. She purchases some clothing items worth Rs. 40,000 from Hari. She
purchases packaging material from Swati’s Boutique for Rs. 10,000. She also pays Rs. 2,000 in cash for cartage on purchases. She
pays Rs. 5,000 as electricity bill and Rs. 3,000 as water bill. During the month of January, she sold goods worth Rs. 1,50,000 in cash
and Rs. 20,000 on credit to Mr. Suresh. She deposited Rs. 1,00,000 in the bank out of her sales proceeds. She paid Rs. 30,000 to
Hari. She received Rs. 10,000 from Suresh. She paid Swati’s Boutique Rs. 9,000 in full settlement. On 31st January, she paid the
salary to all the 3 employees.

On 31st January, Ms. Richa Verma then decided to deposit Rs. 5,00,000 out of surplus bank funds in a Government Bond as an
investment which will provide her an interest of 12% per annum. She also received a special project on 31st January for designing
and customizing some clothes for WeDesign where they will provide the clothes and material and Trendee Pvt. Ltd. will provide
designing & stitching services at a specific fee. The fee for this special project is Rs. 80,000 and has been received from WeDesign.
She also took a WiFi plan for 6 months at a price of 15,000.

Record all of these transactions in a journal and then post them into a ledger. Then, take out a trial balance and prepare the final
accounts in the books of Ms. Richa Verma.

Hint:
1. Since education mode allows entries on only 3 dates (1st, 2nd, and 31st of the month), all our transactions will be dated as per
that. In real life, this would not affect your work. We’re doing it simply because we’re working in the educational mode.
 2. Assume that all transactions are through the bank unless mentioned otherwise.
3. In one of the transactions, Ms. Richa Verma paid Hari Rs. 30,000 on account. When we pay some amount “on account” - it means
that the balance will be settled later on.
4. When you hire any employees, the entry for the salary will not be passed at that very moment. Instead, when we actually pay that
salary on 31st January, that’s when the entry will be recorded.
5. We’re mentioning that “Richa Verma paid/purchased/etc…” but since Richa Verma is working on the behalf of Trendee Pvt. Ltd,
what we mean is that Trendee Pvt. Ltd. has paid/purchased/etc.

Working Note:

S.No. Transaction Accounts involved Nature of account Increase/Decrease Debit/Credit

1 Deposit in HDFC bank as capital HDFC Bank A/C Asset Increase Debit

Richa Verma’s Capital A/C Equity Decrease Credit

2 Paid rent Rent A/C Expense Increase Debit

HDFC Bank A/C Asset Decrease Credit

3 Paid Security Deposit Security Deposit A/C Asset Increase Debit

HDFC Bank A/C Asset Decrease Credit

4 Purchase furniture Furniture A/C Asset Increase Debit

HDFC Bank A/C Asset Decrease Credit

5 Purchase Air Conditioners Air Conditioner A/C Asset Increase Debit

HDFC Bank A/C Asset Decrease Credit

6 Purchase Computer from Softonics Computer A/C Asset Increase Debit

Ltd.
Softonics limited A/C Liability Increase Credit

7 Withdraw cash from bank Cash A/C Asset Increase Debit

HDFC Bank A/C Asset Decrease Credit

8 Clothing items purchased from Hari Purchases A/C Expense Increase Debit

Hari A/C Liability Increase Credit

9 Packaging material purchased from Purchases A/C Expense Increase Debit

Swati’s Boutique

Liability Increase Credit

 (Note: it can be debited to Direct
Expense also depending upon
company policy)

Swati’s Boutique A/C

10 Paid cartage Cartage A/C Expense Increase Debit

Cash A/C Asset Decrease Credit

11 Paid electricity bill Electricity bill A/C Expense Increase Debit

HDFC Bank A/C Asset Decrease Credit

12 Paid water bill Water bill A/C Expense Increase Debit

HDFC Bank A/C Asset Decrease Credit

13 Sales in cash Cash A/C Asset Increase Debit

Sales A/C Revenue Increase Credit

14 Sales on credit to Suresh Suresh A/C Asset Increase Debit

Sales A/C Revenue Increase Credit

15 Deposited cash in bank Cash A/C Asset Decrease Credit

HDFC Bank A/C Asset Increase Debit

16 Paid to Hari Hari A/C Liability Decrease Debit

HDFC Bank A/C Asset Decrease Credit

17 Received from Suresh HDFC Bank A/C Asset Increase Debit

Suresh’s A/C Asset Decrease Credit

18 Paid to Swati’s Boutique in full Swati’s Boutique A/C Liability Decrease Debit
settlement
HDFC Bank A/C Asset Decrease Credit

Discount received A/C Income Increase Credit

19 Paid salary Salary A/C Expense Increase Debit

HDFC Bank A/C Asset Decrease Credit

20 Govt bond purchased 12% Govt. bond A/C Asset Increase Debit

HDFC Bank A/C Asset Decrease Credit

21 Amount received for an Order from HDFC Bank A/C Asset Increase Debit
WeDesign
Fees A/C Revenue Increase Credit

22 WiFi Charges paid WiFi Charges A/C Expense Increase Debit

HDFC bank A/C Asset Decrease Credit

Journal Entries:

Date Particulars L.F. Debit (Rs.) Credit (Rs.)

1.1.2021 HDFC Bank A/C -----Dr 20,00,000

To Richa Verma’s Capital A/C 20,00,000

1.1.2021 Rent A/C -----Dr 20,000

 To HDFC Bank A/C 20,000

1.1.2021 Security Deposit A/C -----Dr 40,000

To HDFC Bank A/C 40,000

2.1.2021 Furniture A/C -----Dr 50,000

To HDFC Bank A/C 50,000

2.1.2021 Air Conditioner A/C -----Dr 1,50,000

To HDFC Bank A/C 1,50,000

2.1.2021 Computer A/C -----Dr 25,000

To Softonics Ltd.’s A/C 25,000

2.1.2021 Cash A/C -----Dr 10,000

To HDFC Bank A/C 10,000

2.1.2021 Purchase A/C -----Dr 40,000

To Hari’s A/C 40,000

2-1-2021 Purchase A/C -----Dr 10,000

To Swati’s Boutique A/C 10,000

2.1.2021 Cartage A/C -----Dr 2,000

To Cash A/C 2,000

2.1.2021 Electricity bill A/C -----Dr 5,000

To HDFC Bank A/C 5,000

2.1.2021 Water bill A/C -----Dr 3,000

To HDFC Bank A/C 3,000

2.1.2021 Cash A/C -----Dr 1,50,000

To Sales A/C 1,50,000

2.1.2021 Suresh’s A/C -----Dr 20,000

To Sales A/C 20,000

2.1.2021 HDFC Bank A/C -----Dr 1,00,000

To Cash A/C 1,00,000

2.1.2021 Hari’s A/C -----Dr 30,000

To HDFC Bank A/C 30,000

2.1.2021 HDFC Bank A/C -----Dr 10,000

To Suresh’s A/C 10,000

2.1.2021 Swati’s Boutique A/C -----Dr 10,000

To HDFC Bank A/C 9,000

To Discount received A/C 1,000

31.1.2021 Salary A/C -----Dr 60,000

To HDFC Bank A/C 60,000

31.1.2021 12% Govt. Bond A/C ------Dr. 5,00,000

To HDFC Bank A/C 5,00,000

31.1.2021 HDFC Bank A/C -----Dr 80,000

To Fees A/C 80,000

 31.1.2021 WiFi Charges A/C ------Dr 15,000

To HDFC bank A/C 15,000

Ledgers:
1. HDFC Bank A/C

Date Particulars F. Rs. Date Particulars F. Rs.

1.1.2021 Richa Verma’s Capital A/C 20,00,000 1.1.2021 Rent A/C 20,000
2.1.2021 Cash A/C 1,00,000 1.1.2021 Security deposit A/C 40,000
2.1.2021 Suresh’s A/C 10,000 2.1.2021 Furniture A/C 50,000
31.1.2021 Fees A/C 80,000 2.1.2021 Air Conditioner A/C 1,50,000
2.1.2021 Cash A/C 10,000
2.1.2021 Electricity bill A/C 5,000
2.1.2021 Water bill A/C 3,000
2.1.2021 Hari A/C 30,000
2.1.2021 Swati’s Boutique’s A/C 9,000
31.1.2021 Salary A/C 60,000
31.1.2021 12% Govt. Bond A/C 5,00,000
31.1.2021 WiFi Charges A/C 15,000

Total 21,90,000 Total 8,92,000

31.3.2021 Balance c/d 12,98,000

 2. Richa Verma’s Capital A/C

Date Particulars F. Rs. Date Particulars F. Rs.

31.3.2021 Balance c/d 20,00,000 1.1.2021 HDFC Bank A/C 20,00,000

3. Rent A/C

Date Particulars F. Rs. Date Particulars F. Rs.

1.1.2021 HDFC Bank A/C 20,000 31.3.2021 Balance c/d 20,000

4. Security Deposit A/C

Date Particulars F. Rs. Date Particulars F. Rs.

1.1.2021 HDFC Bank A/C 40,000 31.3.2021 Balance c/d 40,000

5. Furniture A/C
 Date Particulars F. Rs. Date Particulars F. Rs.

2.1.2021 HDFC Bank A/C 50,000 31.3.2021 Balance c/d 50,000

6. Air Conditioner A/C

Date Particulars F. Rs. Date Particulars F. Rs.

2.1.2021 HDFC Bank A/C 1,50,000 31.3.2021 Balance c/d 1,50,000

7. Computer A/C

Date Particulars F. Rs. Date Particulars F. Rs.

2.1.2021 Softonics Ltd.’s A/C 25,000 31.1.2021 Balance c/d 25,000

8. Softonics Ltd.’s A/C

Date Particulars F. Rs. Date Particulars F. Rs.

31.3.2021 Balance c/d 25,000 2.1.2021 Computer A/C 25,000

 9. Cash A/C

Date Particulars F. Rs. Date Particulars F. Rs.

2.1.2021 HDFC Bank A/C 10,000 2.1.2021 HDFC Bank A/C 1,00,000
2.1.2021 Sales A/C 1,50,000 2.1.2021 Cartage A/C 2,000
31.3.2021 Balance c/d 58,000

10. Purchase A/C

Date Particulars F. Rs. Date Particulars F. Rs.

2.1.2021 Hari’s A/C 40,000 31.3.2021 Balance c/d 50,000

2.1.2021 Swati’s Boutique A/C 10,000

11. Hari’s A/C

Date Particulars F. Rs. Date Particulars F. Rs.

2.1.2021 HDFC Bank’s A/C 30,000 2.1.2021 Purchase A/C 40,000

31.3.2021 Balance c/d 10,000
 12. Swati’s Boutique’s A/C

Date Particulars F. Rs. Date Particulars F. Rs.

2.1.2021 HDFC Bank’s A/C 9,000 2.1.2021 Purchase A/C 10,000

2.1.2021 Discount Received A/C 1,000

13. Cartage A/C

Date Particulars F. Rs. Date Particulars F. Rs.

2.1.2021 Cash A/C 2,000 31.3.2021 Balance c/d 2,000

14. Electricity Bill A/C

Date Particulars F. Rs. Date Particulars F. Rs.

2.1.2021 HDFC Bank A/C 5,000 31.3.2021 Balance c/d 5,000

 15. Water Bill A/C

Date Particulars F. Rs. Date Particulars F. Rs.

2.1.2021 HDFC Bank A/C 3,000 31.3.2021 Balance c/d 3,000

16. Sales A/C

Date Particulars F. Rs. Date Particulars F. Rs.

31.3.2021 Balance c/d 1,70,000 2.1.2021 Cash A/C 1,50,000

Suresh’s A/C 20,000

17. Suresh’s A/C

Date Particulars F. Rs. Date Particulars F. Rs.

2.1.2021 Sales A/C 20,000 2.1.2021 HDFC Bank A/C 10,000

31.3.2021 Balance c/d 10,000
 18. Discount Received A/C

Date Particulars F. Rs. Date Particulars F. Rs.

31.3.2021 Balance c/d 1,000 2.1.2021 Swati’s Boutique’s A/C 1,000

19. Salary A/C

Date Particulars F. Rs. Date Particulars F. Rs.

2.1.2021 HDFC Bank A/C 60,000 31.3.2021 Balance c/d 60,000

20. 12% Govt Bond A/C

Date Particulars F. Rs. Date Particulars F. Rs.

31.1.2021 HDFC Bank A/C 5,00,000 31.3.2021 Balance c/d 5,00,000

21. Fees A/C

 Date Particulars F. Rs. Date Particulars F. Rs.

31.3.2021 Balance c/d 80,000 31.1.2021 HDFC Bank A/C 80,000

22. WiFi Charges A/C

Date Particulars F. Rs. Date Particulars F. Rs.

31.1.2021 HDFC Bank A/C 15,000 31.3.2021 Balance c/d 15,000

Trial Balance:
Trial Balance as on 31.3.2021

S.No Name of Account Dr. Balance Cr. Balance

 1 HDFC Bank’s A/C 12,98,000
2 Richa Verma’s Capital A/C 20,00,000
3 Rent A/C 20,000
4 Security Deposit A/C 40,000
5 Furniture A/C 50,000
6 Air Conditioner A/C 1,50,000
7 Computer A/C 25,000
8 Softonics Ltd.’s A/C 25,000
9 Cash A/C 58,000
10 Purchase A/C 50,000
11 Hari’s A/C 10,000
12 Swati’s Boutique’s A/C
13 Cartage A/C 2,000
14 Electricity Bill A/C 5,000
15 Water Bill A/C 3,000
16 Sales A/C 1,70,000
17 Suresh’s A/C 10,000
18 Discount Received A/C 1,000
19 Salary A/C 60,000
20 12% Govt. Bonds A/C 5,00,000
21 Fees A/C 80,000
22 WiFi Charges A/C 15,000