FLA 89R

Irlan unutr ol Manapcm

Ahmcdat

Mansa Building'

now thal you are herc on

On January 3, 167, Mr. Acharya sald to his son: "Look Manoj,
Dincsh
business experience ralher than iding
Vacation, I would likc you to spcnd thcse holidays gaining
some

rst jot, ;0u can study the Statement of Acorunts for Mansa
away your time in coffcc shops. For the maicrial uncic
this statemcnt from your
Building for the ycar 1 6 (Exhibit 1). I have becn recciving about
last fcw 1 jus file thc slatement as it does not tell me anything
once every ycar for the ycars.
if you can tell me how mucch
he rculs of opcrating the tuilding. Talk to your uncle and let mc sce

profits wc are making from this building."

promincnt collcge of business

administraüori in Westem Indi: wa
Manoj Acharya, a student at a
he regreuei missing te
Dclhi durnng Chrisumas vacation. Alhough
visiting his parents in Ncw
Swinging music in ue coffcc shops, Manoj Acharya decided to dcvotc extra efforts to ihe assigrue
Pandit, His matema
able to meet Mr. Harshavadan
given by his father. Fortunatcly for him, he was
the buiiding.
unclc, the samc day aficr noon at which he gathcrcd the infomation about
of üe
of 20 flats and & shops. A list
Mansa Building' was a four- soreycd structure consisting then is giver
tcaanis ofhe building, the naturc of teir businesses,
and the monthly rents paid 1
was acquired by
in Exhibit. 2. The building which had originally. been constructed
in January 1947
cost was
a cash down basis late in December 1956. Tte acgisition
M Direscharya on

Rs4,80,000. Ni:. Pandit discioscá i á a the une eflifeagursition, the land haeitsan aphzosná té
bf 30 years at the tirie of acquiaiüdn.
vaiue of Rs.1,20.000 and the building an additiona!
19K%.
Mr. Pandit then went on to cxplain the stauement of account for the ycar ended December 3!,

Amount receivable from tenants

Ca
amounting to Rs.7,450. was still outstanding.
u
OnDeccrabcr 31,1966 rent from teanismonth's rent for 2 ais (Nos.6 and 12) had
been outstanding
other hand. orly Rs.425,which was one rent on he two lats.) IN had been the usua! practice
at
the beginaingof th year (i.c.December 1965
the end of that month. In other words, the rent for th
o ccolleca thc ren for cach month before for t e mont
end of that month. In other words, the rent
month of Dcccmber was collectcd before 31. However, Mr. Pandit explaincd, tecause of tis
of Deccmber was collccicd beforc Deccmber. for
involvemcnt in making araigemcnis h
involvemcnt in making the aTrangcments for his
slowed down and hence t : amouni
daughicr's mariagc, thc rent collecion process had ad co
tenants most of his tenants were very reliode
Outstandings. In his opinion, most of the most ier.ails
ime. The only prodlem w:s
be cxpccied to clkar thcir arrcars in. couple of months Ncs.19
Mr. Pandit explaincd further that Fat ar
Cxpected Mr. Pandit to colicct the rent personally.
The rental value for these two flais was Rs.30per mon:
20wcre occupicd by him and his family.

Ahmedabad.
Prqwod by Surcsh A Seshan, Indin Insiwie of Managemen, busis for e s iucws*:
Institue of Manugement, Ahmedabad, is rep«d s a
Ce Matcrial of ue lrdian
Caes arc nt desigoi u fresent llusuauons of either corect or incorrect harlrg o «minut aire pvi
the Indian Insutute of angame.i Alnedabad. Revisad iu 193?.
Copyrnght o 1%7, by
 Balane
9,
On January ,
the amount of cash in the baunk ccouu.

u Ye'o Rs.147,444 ntprescntcd in tle baunk ccount. All cceiMs

ol
rentals
book hd shown balance of Rs. 128,942
a 1Or
ank in this barnk account ard all payrncnts
fonn of cash or cheques wee depositcd the
:i ia ccount. of the barnk taiemer
A comparison
with

es wert mse hrough the same December 31,196 ard

revealed
of cheques arwi deposit slips that all dcposits nade upto
Counterfor's records.
been included by the bank in its
al cteques issicd upto December 31, 1966 had

3 Mr. Satya Narain

had movcd into tl
Narain. Mr. Satya Narain
The ait unt ol Rs.2,500 was receivable fron Mr. Satya a
in Ncw Delhi, hc had to pay
in 1966 arut accoding to the prcvailing custom
No.2y July was p:iid to the
former tenant,
lat 2. Usually this premium
prem:um (pugree) to tthe fomicr tenant of The total anount paid by Mr.

So that the physical possession of the lat

could be obtaincd from him.
owncr of the
onc-third was given to the
Rs.30,000 of which
Saaya Narain to the fomier tenant was rew tcnant Of t e Rs. 10U) Mr.
and tenancy rights to the
uildig for aTanging the uransfcr of tilc other words an anount of Rs.
from the ncw tenant. In
Pandit had received only Rs.7,500 by chcque
2.500 was outstanding

Operating Expenses
Mr. Pandit
s t of these expenses were incured to meet the
nomal operating costs of Uhc building.
rencwal and replacement expenses
said hcwever, thal furnher explanation was necessary on the repairs,
and colkction charges.

a) :pcirs, kenewals, and Replacement

This expen ur was ir: ured ia repairing certzin oonion of the bu:iding. It inclided the pairting

Tie details of the expendiure are as under.

courators for Rs.5,01

Nomal repairs o the building Rs. 177.00

Paining Contractor's Bill Rs. 5,000.00

Mr. Pandit explained that it had been the usual practice to paint the exterior of the building itule
before Diwali each year. The interior of the building was repaintcd once in evcry iwo ycars. n
Ociober 1966 the building had been painted both extemally and intemally a a total cost of Rs.5.000.
Whiie he could noi say definitely what was the split up of the cost of Rs. 5.000 between inemal ard
cxiemal paintüng, Mr. Pandit recalled that last year when only the exterior painung had been camcd

out the contractor's bill had amounted to Rs.3,000.

-

Collection Charges
The collecion charges of Rs.2,093 reprcsenied a 4 percent commission payment to Mr. Paadit on the
rend collected during the year. While amiving at this figure of Rs.2,093 an anout of Rs.2,.050
colccted in December 1966 had becn cxcluded fron ihe calculation. Mr. Pudit was givcn te b
coinmissior and the two flats occupicd oy him and his fanily free ot cost, as nenuicration lor lwkn8
aler te collecion of rentals,
carrying out repairs avl hanllina s
. Insauronce Premium
Te
Mr. P'ardit had made it a comprthensivc insuranci policy for thc tuilding.
practicc tr takc
of fircs, carthquakes arki other
mse ol taking a pmlicy was to obtain protcction against tle hazards suci
insurancc prcmium n
i i s of calamitics. On January 1. 196 Rs.2,0X) had bocn paid as

compelensivc policy. Thc lifc of the olicy was 2 ycars

Property Rates and Taxes

ard tatcs which wcrc in advincc half

payablc
ratcs
The Municipal Corporation collccted pmprty that ic
ihad reccivcd a bill fmn the Corporation staing
ycardy. On October 31, 1966, Mr. Pandit 1967, was Rs. 12.000. ir
from Octoler 1, 1966 to March 31,
pmcny ralcs and taxcs for the pcriod
P'andit had not yct paid this bil.

bccn reccived on Octolcr 31. %5 and Apil 30, 1,56.

Farlicr, bills for Rs. 12,00) cach had
two covccd the
1S, 1966 and July 31, 1966 and had
Thcse bills had becn clcared payment on Fchniary
0. 1966.
penl fm Octobcr 1. 1965 to Scptember

Rcnt rceivcd in Advance

Pandit tliat hc would pay Uhe rent

for Uhe months of Januar ind
Cc of thc tenanis infomcd Mr. A iim of
thcse 1wo mixi .
would be awa" fmm Nevw Delhi durng
Fbuary in advancc sincc hc inant of Flat No.11 as tc
rent in adva'.cc.
Re.50 c2civcd from Mr. Hajit Singh,
wz
Dincsh Achary2 - Capitai áceu
8.

that the itcm of Rs.1 i4,267 hclpcd to balance

the Statcment of Account. It also
Mr. Pandit cxplaincd Mr.
Dincsh Acharya fmm thc »perations ol Mansa Building.
rcprcsenicd the amount due to Mr.
had withdrawn Rs.10,000 from the building's
Pandit added that during thc ycar Mr. Dii:e Achary:
h
cducational cxpenscs and ouhcr houscheld nccds.
bank in ordcr to mcct Manoj's
for somctimc. Manoj Acharya rcalizcd why his
Aftcr studying the statcmeni of Account (Exhibit 1)
ycar. Tle stalemcnt was ncithcr
aNcr a statcnici
athcr had becn illing away tUcsc stalcimcnLi ycar would be
fcit that his father
of asscts and liabilitics nor a prdfit and loss statcmcnt. Manoj Acharya and Loss
of the building if Balance Shect and Profit
in a bcttcr position to undcrstand the allairs
a

Wit. this in mind, Manej Acharya preparcd Ealaca.

a
Statcment wcre prcparvd for Mansa Building.
of the ycar i.c. January 1, 1966 (Exhibii 3). This
Shoct as it would havc appcarcd at the beginning
inanncr he
Manoj Acharya fclt, would bc a starting point to prcparc financial statcments in the
good
had boen instructed at his collcgc.

Required
in the Balance Shcct shown in Exhi.vit 3.
Do you think any changc arc ncccssary
Daccmikr 31
2. Prcparc a Profit and Loss Statcmcnt for the ycar 1966 and Balance S*c. as on
1966 in a form that you think would be most vscful to Mr. Dincsh ickarya. You shu e
thc diffcrtnccs bctwccr your statcmcnts ani the S 1:¢ cf Acerul as

prcparcd to cxplain
preparcd by Mr. Pandit.
 Exhibu

Mansa Bullding

Statenent of Account for the Year Ended Dec. J1, 1%6

Amounu Roceiv able (rom Tenanu

Fl No. Month Amount

6. Propaty, Rates and tases
I Dec. '66 150
Rs.12000

Nov.-Dec. 66 300

Nov. 16-3- and Dec. '66 225

Oct Nov. Doc. 66 525

7. Ren Received in
9 Dec. 66 254 SO
Advance Flat No. 11

10 Nov. Doc. 500

12 July to Dec. '66 1500

13 Nov. Dec. S00

8. Dinesh Acharya Capiul
14, 15 Nov, Dec 154267
1616&
&17 3000 Accounl

Shop
No.
100
Dec. 66
3, ec. 200

200
eav. Dec.
7450

2 Bank Balance 147444

3. Mr. Sarya Narain 2500

4. Operating Expenses
rinting & Sutonery 25
Posuge & Telegrams 50

Bank Chrge 28

Repairs Rencwals & Replacenent S1T7

Colecion chargs 2093 7373

7373
S. Insurance Preniun 200

166767 166767

4
 (5/

thibu 2

Mana Bullilng
Fl No. Nne ol Tenant Nature of Buineu Memthly
Rent

Sonali Mukerjee
Advatising Atency
10
Saty Narain Businetsman
150
3 .K. Silk & Company Traden
150
4
D.PilamberSingh Dentit
50
Roxhan lal Covenment Empkoyece
175
JL. Jain Stockroker
6 175
Sweetmect Merchant
M.I. Jain
175
Armed Forces
8Col.Jauwir Lal 250
Consuling Surgcon
Dr. P.C. Kamor

10 Tilak Rej. Dever Raj 250

Lawyer's Office
and Company
250
BusincssEx«cuive
11 Harjit Singh 25)
PoliücalWorker

12 B.D. Greaver
20
Vururrsai i
1500
Business Offices
PvL Lud.
14,15,16 Charles Timba
&17 250
Police
Inspeclor of
Dy.
18 Ranjit Sagar Jain 1S0

Harshavadan Pandir
19 150

20 Harshvadan Pandi 100

Newspapcr Agent
Kumar & Sons
Shop Dalip
No.1. 100
Chemist & Druggist
2 Surindcr Kumar Gill
3 Kasluri Ll & Co. Provision Stores 200
Kasturi Lal & Co.
100

Dr. Suraj Prakash

Chiropodist
100
Art Studio
Govind Rajan
llouse 200
7 Tamil Naxlu Coffoe Restaur ant
House
8 Tamil Natu Colfee Toul Monthly Rent Rs. $375

Ha:shvadan Pandit, mucnal uncle of Manoj Acharya

by Mr.
Flats occupied
 ldt

MANSA UDUNG
Nalance Sheet as on leiuar y I, T9%6

Liabiliies A Capital
Ka.425) Ra.17
Laind itald vale 2000 X) ALrued Colletn chargea°(4% on

the tine qisitim)

Acunu Payable lor
tales and laNcs R.12010
Moesty

A Dn (h yea l s Amt aylicable 6000

6000
line asin) 1ONGAN)

Ownern Capital
480000
A m t receivable 425
495350)
1530
Cask thandA Rs. 2N942| etainwd canings
501367
S013367

havc
1%5. If dhis had hayeed uhe colkectin charge woukd
Thu red laul have bwn colln ted in

t me aN eANnse lor dial year.

u e basis of 30 yea life fron date of acquisiton
October 1, 1965 o March 31, 1968. Only
h u i an alvaxe paynnts nouce covering uhe prriod from
relating w 1965 have been shown s outslandiny
namthe poperty ratea and taaca

balucing ikem.