Cap Nnaf Essay Example for Free

Cap Nnaf EssayMr. Raghunath was happy that Rahul showed groovy sideline in his business but was worried about Ram who would always spend cadence with computers. He felt that if the interest of the two tidingss be put to bearher they could start a favorable business of their own. The boom in the IT industry made him find ways to satisfy his sons dream. After college, the twins were drifting apart due to varied interest. Mr. Raghunath decided that this is the time for him to intervene and overhear decisions for his sons. He decided to start a computer business for his sons.He asked Rahul, a commerce ammonium alum to draw up a proposal for the same. Rahul came out with the following ideas The argona they lived on ad acquit shop consisted of middle income group families and many of them did not possess computers at home Their shop could leave behind the following services * Computer classes for various age groups. * Computer using facilities on payment per periodical basis and printing of documents from computers. * Internet access facility at the prevailing market rates by entering into contract with AIRTEL. * Computer games corer for childrenRajiv jumped at the idea and they made up a common proposal. Rajiv valued that they purchase 10 computers and start with first two areas of operation and expand when things go well. The shop they had at the market place was a single storey building. Their father offered to build the first floor and prepare it to them for their business. He spent 5,00,000 on construction of the facility and gave them 5,00,000 for the business. The sons went to bank and put up their proposal and managed to get a loan to the extent of 75% of the cost of computers 4,00,000 with printers.As the bank manager was aware of the recognition worthiness of Mr. Raghunath, he advanced loan of 3,00,000. Total amount to be repaid will be 3,60,000 including interest in three annual installments as follows * End of the first class = 1,30,0 00 * End of the 2nd year = 1,20,000 * End of the 3rd year = 1,10,000 (Where 1, 00,000 is the principal repayment) They started business on 1st April 2010. Rahul decided to deposit 4, 40,000 in the bank. He gave 1, 00,000 to computer company as 25% of the value of computers purchased and 3, 00,000 out of bank loan availed.He deposited 20,000 for electrical connection with the Electricity Board. He paid deposit of 1, 00,000 with AIRTEL for Internet connection. He used the think connection of the shop as there were two connections at the shop. The brothers got the computer cafe furnished by paying 50,000. Rahul got pamphlets printed and distributed at the cost of 4,500 in the surrounding colonies. exclusively payments were to be made by hitchs. All the receipts were in cash to be deposited in the bank on the same day. The students on the sightly paid a monthly fee of 500 for the three months computer evening classes.There were a number of internet subscribers and receipt s on account of internet facility was 10,000 a month in the first quarter on an average. They decided to buy and sell computer stationery also like floppy, discs, CDs etc. At the end of the financial year, their results showed the following Total revenue including sale of computer stationery 4,98,000 Purchase of computer stationery 55,000 Electricity charges yet to be paid 1,24,000 Telephone charges 34,000 Petty expenses 12,000 fun expenses 10,000 Maintenance expenses 10,000There was a helper at their fathers shop, who agreed to clean up the computer cafe and fetched water to various visitors. For the additional services, he was paid 500 per month. They withdrew . 3, 000 by cheque each month for their personal expenses. They paid bank loan regularly. The father was pleased at their sons energy. He wanted to expand business. Mean while Rahul received the pass book assertion (for the end of March 2011) which showed the transactions as follows Particulars Deposit withdrawal B alance Balance as on 1 march 2011 4,76,500 CRFees remitted direct into business account. 50,000 5,26,500 CR Bank charges 500 5,26,000 CR Withdrawal by cheque no 6,000 5,20,000 CR Payment by cheque no. 6,000 5,14,000 CR engage credited 2,000 5,16,000 CR Balance as on 31 march 2011 5,16,000 (CR) 1. Analyze the transactions and let off the rules applied as per double entry system of bookkeeping. 2. Journalize the above transactions. Post them into the ledgers and prepare trial balance. 3. restore Bank Reconciliation Statement and make necessary adjustment in the books of account. 4.Prepare Profit and freeing account and Balance Sheet. 5. Charge depreciation 25% on computers, 10% on furniture, 5% on buildings. 6. Paisa can be rounded off. 7. What are the basic assumptions and concepts applied by Rahul while preparing the above statements? 8. manoeuvre profitability ratios. 9. They approached bank for further loan. Compute the ratios the banker will require before granti ng the loan. 10. Comment on the efficiency of the business if the net profit and gross profit in similar type of business concerns are 20% and 50% respectively.