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ASSIGNMENT IIIMANSA BUILDING CASE STUDY
Submitted by Group IV
Members of the TeamMembers of the Team
Ruchika JainRuchika Jain Heena TejwaniHeena Tejwani Angadjeet WaliaAngadjeet Walia Hitesh Hitesh Chetna JainChetna Jain Dharmesh ChanchlaniDharmesh Chanchlani Meenal KhatriMeenal Khatri Amit ChauhanAmit Chauhan
Case at a glanceCase at a glance
Mansa Building , was constructed in Jan Mansa Building , was constructed in Jan 1981 at Delhi. It was a 4 story building , 1981 at Delhi. It was a 4 story building , comprising of 20 flats & 8 shops.comprising of 20 flats & 8 shops.
It was acquired on a cash down basis.It was acquired on a cash down basis. Mr. Dinesh Acharya purchased it in 1990.Mr. Dinesh Acharya purchased it in 1990. His brother-in-law Mr. Harshwardhan His brother-in-law Mr. Harshwardhan
looked after the building & the accounts.looked after the building & the accounts. Total acquistion cost was Rs. 48,00,000.Total acquistion cost was Rs. 48,00,000. Land valued at Rs. 12,00,000 (1990).Land valued at Rs. 12,00,000 (1990). Estimated life of the building was 30 yrs.Estimated life of the building was 30 yrs.
P&L A/c for the year-2000Particulars Amount Particulars AmountTo Repair & Painting Expenses ( W.N. 5 )
To Collection charges
( W.N. 3 )
To Insurance
To property rates & tax
To operating expenses
To depreciation
To Net Profit
41,770
21,380
10,000
2,40,000
1,030
1,20,000
2,74,820
7,09,000
By collection of Rent
( W.N. 1,2 )
By Premium Share
(75000 + 25000 O/s)
6,09,000
1,00,000
7,09,000
Balance Sheet as on 31st Dec 2000
Liabilities Amount Assets AmountCapital 48,00,000
Less Drawing 1,00,000
P&L
Rent Received Adv
O/s Tax
O/s collectn.charges
Retained Earning
47,00,000
2,74,820
5,000
60,000
820
1,53,500
51,94,140
Building 25,20,000
Less Dep. 1,20,000
Land
Prepaid Insurance
Prepaid collection
Prepaid painting expenses
Accrued Premium
Accrued Rent
Cash at Bank
24,00,000
12,00,000
10,000
200
10,000
25,000
74,500
14,74,440
51,94,140
Bank Account
Particulars Amount Particulars AmountTo Balance b/d
To Rent ( W.N.1 )
To premium on transfer
12,89,420
5,43,750
75,000
19,08,170
By Drawing
By Repairs & Maintenance
By Insurance
By Rate & Taxes
By Collec charges
By Op Expenses
By Balance C/d
1,00,000
51,770
20,000
2,40,000
20,930
1,030
14,74,440
19,08,170
Working Note 1
Actual amount of collectionTill dec. = 20,930/ 4 *100 =
5,23,250
After Dec. = +20,500
5,43,750
Rent charged to P&L A/CRent charged to P&L A/C
Total Rent collected= 5,43,750Total Rent collected= 5,43,750
(+) O/s Rent received= 74,500(+) O/s Rent received= 74,500
(-) prepaid Rent = 5,000(-) prepaid Rent = 5,000
(-) Rent of last year = 4,250(-) Rent of last year = 4,250
6,09,000 6,09,000
Assuming that o/s rent of last year i.e. 4,250 Assuming that o/s rent of last year i.e. 4,250 has been received this year.has been received this year.
WORKING NOTE 2
Working Note 3Working Note 3
Amt of collection chargesAmt of collection charges
Paid during the Year= 20,930Paid during the Year= 20,930
(+) o/s(20500*4%)= 820(+) o/s(20500*4%)= 820
(-) o/s of last year= 170(-) o/s of last year= 170
(-)Collection charges on(-)Collection charges on
advance rent = 200advance rent = 200
21,38021,380
Working Note 4Working Note 4
Calculation of depreciationCalculation of depreciation
Value of building =36,00,000Value of building =36,00,000
Life of building =30 yrsLife of building =30 yrs
Depreciation 3600000/30 =1,20,000Depreciation 3600000/30 =1,20,000
WORKING NOTE 5WORKING NOTE 5
Painting charges charged to P & L A/C Painting charges charged to P & L A/C TOTAL PAINTING CHARGES = 50,000TOTAL PAINTING CHARGES = 50,000 EXTERNAL PAINTING CHARGES= 30,000EXTERNAL PAINTING CHARGES= 30,000 INTERNAL PAINTING CHARGES INTERNAL PAINTING CHARGES
(for 2 yrs.) =20,000(for 2 yrs.) =20,000
Therefore,for 1 yr it is 10,000 only.Therefore,for 1 yr it is 10,000 only.
Total painting and operating charges Total painting and operating charges =30,000 + 10,000 + 1,770 = 41,770=30,000 + 10,000 + 1,770 = 41,770
According to us the statement According to us the statement prepared in prepared in Exhibit 3Exhibit 3 should be in should be in format as per format as per Schedule 4 of Schedule 4 of Companies Act 1949Companies Act 1949 that is the that is the statement should be in balance sheet statement should be in balance sheet format i.e. Liabilities on Left side and format i.e. Liabilities on Left side and Assets on Right side of the table . Assets on Right side of the table .
Profit and loss account and balance sheet Profit and loss account and balance sheet prepared by us are better than statement prepared by us are better than statement prepared by Mr. Pandit because they prepared by Mr. Pandit because they provide the user with all the necessary provide the user with all the necessary information in a systematic and easy way information in a systematic and easy way which can be easily understood by any which can be easily understood by any person.person.
Statement prepared by Mr. Pandit was Statement prepared by Mr. Pandit was not able to provide distinction between not able to provide distinction between incomes and expenses. That is why we incomes and expenses. That is why we feel proper accounting methods should feel proper accounting methods should be used while recording transactions of be used while recording transactions of Mansa Building . Mansa Building .
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