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 .