Mr. Harshawardhan Nanawati ( Mr. H) of Mumbai won 70 lacs after the payment of tax from a money game…

Mr. Harshawardhan Nanawati ( Mr. H) of Mumbai won 70 lacs after the payment of tax from a money game show KBC in June 2000. Out of the net amount received after the tax, he donated rs. 30 lacs to a charitable institution being run for the welfrae of old people and orphans as per the wish of his mother. In addition, he spent Rs. 15 lacs in his sister marriage, the remaining amt. 25 lacs was invested in his own newly strted business of manufacturing shirts on 1.1.2001.
He deposited Rs. 20 lacs in SBI in firms
The monthly running expenses of the van is Rs. 2000. name and remaining amount was retained as cash in hand.
He hired a premises for which he paid rent of Rs. 30000 per month. The factory and shop occupied the ground floor and he used the upper storeys for residential purposes. Wages and running expenses of van and petty expenses are to be paid in cash, while all other payments and expenses are to be made through bank.
He also purchased a delivery van on 1.1.2001 for Rs. 5 lacs. The estimated useful life of the van is 10 yrs, with an anticipated residual value of Rs. 60000.The delivery van was used to the extet of 2/5th for delivering goods to the customer and 3/5th for collecting raw materials from suppliers.
Mr. H uses his pr5ivaqte telephone for business calls, but has paid the total amt. from business bank account, he estimates that the business calls accounts for 4/5th of the total charge. The total charge amounted to Rs. 51100.
He spent Rs. 50900 on furnishing his office. An imported Japanese machine was purchased for Rs. 4 lacs with an estimated life of 10 yrs. And estimated residual value of Rs. 50000. Installation charges amount to Rs. 30000 on the above machinery was wrongly included in wages.
Following fighures extracted from his books at the end of year 2001 31st December.
1 Total sales during the yr amoutned to 4000 shirts at 400 each.
2 1/4th of the total sales are on credit card and the balance for cash.
3 Out of the total cxash sales, 3/5th of the receipt is realized by cheques
Following are the expenses incurred during the year 2001.
1 Wages Rs. 36000 ( incl. of installation charges of machine )
2 Raw materials purchased for cash : : Rs 472000
3 General expenses : Rs. 46500
4 Advertisements: Rs. 41500
5 Electricity charges : Rs. 60000
6 Insurance: Rs. 40000
7 Amts. Paid to suppliers : Rs. 460000
8 Petty expenses incurred: Rs. 30000
9 Salary to salesman : 12000 per month.
10 Discount allowed to customer : Rs. 47000
11 Bad debts : Rs. 25000
12 Return inwards : Rs. 22000
13 Return outwards : Rs. 90000
14 Rent: Rs. 180000
15 Discount received freom suppliers amounted to Rs. 31000
16 Interest received from SBI : Rs. 150000
At the end of the year:
1 Due from customers was Rs. 100000 including Rs. 4000 recovered from a customer who already had returned the goods and this amount was to be adjusted against sub-frequent purchase against customer.
2 Amt. due from Credit purchase : Rs. 260000
3 Closing stock : Rs. 471600 ( inclusive of goods costing 2200 that was worthless because of some technical defects in them. Cost of goods lying with customers on approval ( return ) basis ( sale price is Rs. 20000) is cost price 15000 wrongly included. Closing stock also includes cost of finished goods sold along with stock of raw materials.
You are requested to find out :
1 Cash receipt during the year from the debtors assuming that they pay only through cheques. – a)Credit purchase of raw materials, bank balance at the end of year 2001. b)Cash in hand during the year. C) Drawings made during the year.
2 Give necessary journal entries. Prepare ledger accounts and a trial balance at the end of the year.
3 Prepare financial statements for the year 2001/
4 Prepare cash book and ledger of sundry debtors and sundry creditors only.
Mr. Harshawardhan Nanawati ( Mr. H) of Mumbai won 70 lacs after the payment of tax from a money game show KBC in June 2000. Out of the net amount received after the tax, he donated rs. 30 lacs to a charitable institution being run for the welfrae of old people and orphans as per the wish of his mother. In addition, he spent Rs. 15 lacs in his sister marriage, the remaining amt. 25 lacs was invested in his own newly strted business of manufacturing shirts on 1.1.2001.
He deposited Rs. 20 lacs in SBI in firms
The monthly running expenses of the van is Rs. 2000. name and remaining amount was retained as cash in hand.
He hired a premises for which he paid rent of Rs. 30000 per month. The factory and shop occupied the ground floor and he used the upper storeys for residential purposes. Wages and running expenses of van and petty expenses are to be paid in cash, while all other payments and expenses are to be made through bank.
He also purchased a delivery van on 1.1.2001 for Rs. 5 lacs. The estimated useful life of the van is 10 yrs, with an anticipated residual value of Rs. 60000.The delivery van was used to the extet of 2/5th for delivering goods to the customer and 3/5th for collecting raw materials from suppliers.
Mr. H uses his pr5ivaqte telephone for business calls, but has paid the total amt. from business bank account, he estimates that the business calls accounts for 4/5th of the total charge. The total charge amounted to Rs. 51100.
He spent Rs. 50900 on furnishing his office. An imported Japanese machine was purchased for Rs. 4 lacs with an estimated life of 10 yrs. And estimated residual value of Rs. 50000. Installation charges amount to Rs. 30000 on the above machinery was wrongly included in wages.
Following fighures extracted from his books at the end of year 2001 31st December.
1 Total sales during the yr amoutned to 4000 shirts at 400 each.
2 1/4th of the total sales are on credit card and the balance for cash.
3 Out of the total cxash sales, 3/5th of the receipt is realized by cheques
Following are the expenses incurred during the year 2001.
1 Wages Rs. 36000 ( incl. of installation charges of machine )
2 Raw materials purchased for cash : : Rs 472000
3 General expenses : Rs. 46500
4 Advertisements: Rs. 41500
5 Electricity charges : Rs. 60000
6 Insurance: Rs. 40000
7 Amts. Paid to suppliers : Rs. 460000
8 Petty expenses incurred: Rs. 30000
9 Salary to salesman : 12000 per month.
10 Discount allowed to customer : Rs. 47000
11 Bad debts : Rs. 25000
12 Return inwards : Rs. 22000
13 Return outwards : Rs. 90000
14 Rent: Rs. 180000
15 Discount received freom suppliers amounted to Rs. 31000
16 Interest received from SBI : Rs. 150000
At the end of the year:
1 Due from customers was Rs. 100000 including Rs. 4000 recovered from a customer who already had returned the goods and this amount was to be adjusted against sub-frequent purchase against customer.
2 Amt. due from Credit purchase : Rs. 260000
3 Closing stock : Rs. 471600 ( inclusive of goods costing 2200 that was worthless because of some technical defects in them. Cost of goods lying with customers on approval ( return ) basis ( sale price is Rs. 20000) is cost price 15000 wrongly included. Closing stock also includes cost of finished goods sold along with stock of raw materials.
You are requested to find out :
1 Cash receipt during the year from the debtors assuming that they pay only through cheques. – a)Credit purchase of raw materials, bank balance at the end of year 2001. b)Cash in hand during the year. C) Drawings made during the year.
2 Give necessary journal entries. Prepare ledger accounts and a trial balance at the end of the year.
3 Prepare financial statements for the year 2001/
4 Prepare cash book and ledger of sundry debtors and sundry creditors only.