Accounting For Business 24 October Ii

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ACCOUNTING FOR BUSINESS AFTERSCHO☺OL – DEVELOPING CHANGE MAKERS

CENTRE FOR SOCIAL ENTREPRENEURSHIP PGPSE PROGRAMME –

World’ Most Comprehensive programme in social entrepreneurship & spiritual entrepreneurship

OPEN FOR ALL FREE FOR ALL


ACCOUNTING FOR BUSINESSDr. T.K. Jain.

AFTERSCHO☺OLCentre for social entrepreneurship

Bikaner M: [email protected]

www.afterschool.tk, www.afterschoool.tk

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• On 1st January, 2007 P and Q entered into a Joint Venture to Underwrite 10,000 equity shares of Rs. 25 bach for a commission of 4% on issue price of share which were issued at par, the entire amount being payable on application and allotment, the public took up 9,500 shares. The underwrites were to bear all expenses of issue of shares. These expenses were met by P on 1st January, 2007 and amounted to Rs. 1,400. On 1st February 2007 Q paid for 500 shares which had to be taken up by the underwriters after deducting commission due from the company. Q sold 400 shares for Rs. 9,600 on 1st March, 2007. Joint Venture was closed on 31st March, 2007 when Q sold the remaining shares @ Rs. 24.50 per share. It was decided to share profits and loses equally after charging and allowing interest @ 6% per annum on receipts and payments by the participants


Calculation of profits of P & Q

• Commission = 4/100*25* 9500 = 9500• P paid Rs. 1400 on 1/1/07. interest on this

amount for 3 months = 1400*3/12*6/100=21• Q’s investment = 500*25*96/100 =12000• Interest = 9600*1/12*6/100=48• 2400*2/12*6/100 = 24 total = 72.• Profit on share : (9600+2450) – 12000 = 50• Profit = 9500+50 -(21+48)=9481 divided

equally among the partners.


• X and Dhaval entered into a joint venture involving the buying and selling of old railway material. The profit and loss was to be shared equally. The cost of the matérial purchased was Rs. 85,000 which was paid by Gotiwho drew a bill on Dhaval at two months demand for 60,000. The bill was discounted by Gotiat a cost of Rs. 480. ‘The transaction relating to the venture was (a) Gotipaid As. 600 for carriage, As. 1,000 for commission on sales and As. 400 travelling expenses, (b) Dhaval paid As. 200 travelling expenses and As. 300 sundry expenses; (c) sales made, by Gotiamounted to Rs. 40,000 and sales made by Dhaval were Rs. 60,000. Goods costing As. 2,000 and Rs. 3,000 (being unsold stock) were retained by Goti and Dhaval respectively and these were charged to them at prices to. show the same rate o gross profit that made on total sales (excluding these sales). Goti was credited with a sum of As. 800 to’cover the cost of warehousing and insurance, The expense in connection with the bill were to be treated as a charge against the


Profit from Joint Venture • First we have to find rate of GP. The total

sale is of Rs. 100000 (40000 by Goti and 60000 by Dhaval). Thus profit is Rs. 20000

• (because they had purchased goods of Rs. 85000 and kept goods of 5000 with them. Thus profit % is 25%. They had also spent some money on that as : (480+1000+400+800+500+600) = 3780

• Thus Total sales = (100000+6250) – (85000+3780) = 17470 – to be divided equally among the partners. Answer.


• On 1St August 2007, A accepts a two months bill for Rs. 2,200 drawn by B for the mutual accommodation of both. The latter then discounts the bill with his bankers for Rs. 2,134 and the proceeds are shared equally between the parties, but B fails to pay A his share of the amount, and instead accepts a two months bill for the amount due by him including interest at 12% per annum. The bill is then met by B on the due date.What is the amount of this bill?


Goti of Bikaner sends goods costing Rs. 1 lakh to Monu of Delhi.

3/5th of the goods were sold by consignee for Rs. 70000.

Commission 2% on sales plus 20% of sales less all commission exceeds cost. What will be

commission? • 2% of 70000 = 1400. 70000-3/5of 1 lakh= 10000.

10000-1400=8600. 20/120 of 8600 = 1433. Thus total commission = 2833 Ans.


Goti drew an accommodation bill on Monu for Rs. 2 Lakh and

discounted it from bank @10% for 3 months. Monu also drew an

accommodation bill on Goti of Rs. 5 Lakh and got it discounted @12%

for 6 months. What is the net amount to be paid by whom, what

commission will they bear?


Solution …• Discount on 2 lakh= • 200000*10/100*3/12 = 5000• Goti has to return Rs. 2 Lakh to Monu after 3

months. Goti will bear Rs. 5000• Discount on Rs. 5 Lakh• 500000*12/100*6/12 = 30000• Monu will send Goti Rs. 5 Lakh after six

month and will bear 30000. Thus the net amount payable is Rs. 3 Lakh by Monu to Goti after six month. Answer.


Z Ltd. issued 10,000 shares of Rs.10 each. The called up value

per share was Rs.8, The company forfeited 200 shares of Mr. A for

non-payment of 1st call money of Rs.2 per share. He paid Rs.6 for application and allotment money.

On forfeiture, the share capital account will show balance of ?


Solution …

• Share Capital Account • = (10000-200) *8 = 78400• Balance in forfeiture account • = 6*200 = 1200 • Answer.


S draws 2 bills of exchange on 1.1.06 for Rs 3,000 and Rs 5,000 respectively. The bill of exchange for Rs 3,000 is for 2 months, while the bill of exchange for Rs 5,000

is for 3 months. These bills are accepted by K. On 4.3.06 K requests S to renew the first bill with interest at 18% p.a. for a period of 2 months. S agrees to this proposal. On 20.3.06 K retires the acceptance for Rs 5,000 the interest rebate i.e., discount being Rs 50.Before the due date of the renewed bill K becomes

insolvent and only 60 paise in a rupee can be recovered from his estate. How much bad debt will be

recorded in the books of S:


Solution

• There are 2 bills = the bill of Rs. 5000 has been paid.

• The bill of Rs. 3000 has to be paid. • 3000 + interest for 2 months• 3000*2/12*18/100 =90• New bill is for 3090. since only 60 paise

per ruppe is recovered, the bad debt is :• 3090*.4 =1236 answer.


B Ltd. issued shares of Rs.10 each at a discount of 10%. Mr. C

purchased 30 shares and paid Rs.2 on application but did not pay the

allotment money of Rs.3. If the company forfeited his entire shares,

the forfeiture account will be credited by

• 2*30 = 60 answer.


A draws a bill on B for Rs 50,000. A endorsed it to C in full settlement of

Rs 50,500. Notingcharges of Rs 200 as the bill

returned dishonoured. A want to pay the amount to C at 2 %

discount. The amount to be paid by A to C will be:


Solution

• 50500 + 200• 50700 – 2% (discount)• =50700-1014= 49686 answer.


On 1.1.05 Goti draws a bill on Dhaval for Rs 15000 for 3 months. At maturity Dhaval request Goti to

accept Rs 5000 in cash and for balance to draw a fresh bill for 2 months together with 12% p.a.

interest, amount of interest will be:• Interest on 10000 *2/12*12/100 =200

answer.


X draws a bill on Dhaval for Rs 20,000 for 3 months on 1.1.05. The bill is discounted with banker at a charge of Rs 100. At maturity the

bill return dishonoured. In the books of X, for dishonour, the bank

account will be credited by:

• Rs. 20000 answer.


ABOUT AFTERSCHO☺OL

Afterschoool conducts three year integrated PGPSE (after class 12th along with IAS / CA / CS) and 18 month PGPSE (Post Graduate Programme in Social Entrepreneurship) along with preparation for CS / CFP / CFA /CMA / FRM. This course is also available online also. It also conducts workshops on social entrepreneurship in schools and colleges all over India – start social entrepreneurship club in your institution today with the help from afterschoool and help us in developing society.


Why such a programme?

• To promote people to take up entrepreneurship and help develop the society

• To enable people to take up franchising and other such options to start a business / social development project

• To enable people to take up social development as their mission

• To enable people to promote spirituality and positive thinking in the world


Who are our supporters?

• Afterschoolians, our past beneficiaries, entrepreneurs and social entrepreneurs are supporting us.

• You can also support us – not necessarily by money – but by being promotor of our concept and our ideas.


About AFTERSCHO☺OL PGPSE – the best programme for developing great

entrepreneurs• Most flexible, adaptive but rigorous programme• Available in distance learning mode• Case study focused- latest cases • Industry oriented practical curriculum• Designed to make you entrepreneurs – not just

an employee• Option to take up part time job – so earn while

you learn • The only absolutely free course on internet


Workshops from AFTERSCHO☺OL

• IIF, Delhi• CIPS, Jaipur• ICSI Hyderabad Branch• Gyan Vihar, Jaipur• Apex Institute of Management, Jaipur• Aravali Institute of Management, Jodhpur• Xavier Institute of Management, Bhubaneshwar • Pacific Institute, Udaipur• Engineering College, Hyderabad


Flexible Specialisations:• Spiritualising business and society• Rural development and transformation• HRD and Education, Social Development• NGO and voluntary work• Investment analysis,microfinance and inclusion • Retail sector, BPO, KPO• Accounting & Information system (with CA / CS /CMA)• Hospital management and Health care• Hospitality sector and culture and heritage• Other sectors of high growth, high technology and social

relevance


Salient features:• The only programme of its kind (in the whole world)• No publicity and low profile course• For those who want to achieve success in life – not just a

degree• Flexible – you may stay for a month and continue the rest of

the education by distance mode. / you may attend weekend classes

• Scholarships for those from poor economic background• Latest and constantly changing curriculum – keeping pace

with the time• Placement for those who are interested• Admissions open throughout the year • Latest and most advanced technologies, books and study

material


Components • Pedagogy curriculum and approach based on IIM Ahmedabad and ISB

Hyderabad (the founder is alumnus from IIMA & ISB Hyderabad)• Meditation, spiritualisation, and self development • EsGotitial softwares for business• Business plan, Research projects• Participation in conferences / seminars• Workshops on leadership, team building etc. • Written submissions of research projects/articles / papers• Interview of entrepreneurs, writing biographies of entrepreneurs• Editing of journals / newsletters• Consultancy / research projects • Assignments, communication skill workshops• Participation in conferences and seminars• Group discussions, mock interviews, self development diaryng • Mind Power Training & writing workshop (by Dr. T.K.Jain)


Pedagogy • Case analysis,• Articles from Harvard Business Review • Quiz, seminars, workshops, games, • Visits to entrepreneurs and industrial visits• PreGotitations, Latest audio-visuals• Group discussions and group projects• Periodic self assessment• Mentoring and counselling• Study exchange programme (with institutions out of

India)• Rural development / Social welfare projects


Branches

• AFTERSCHO☺OL will shortly open its branches in important cities in India including Delhi, Kota, Mumbai, Gurgaon and other important cities. Afterschooolians will be responsible for managing and developing these branches – and for promoting social entrepreneurs.


Case Studies

• We want to write case studies on social entrepreneurs, first generation entrepreneurs, ethical entrepreneurs. Please help us in this process. Help us to be in touch with entrepreneurs, so that we may develop entrepreneurs.


Basic values at AFTERSCHO☺OL

• Share to learn more• Interact to develop yourself• Fear is your worst enemy• Make mistakes to learn • Study & discuss in a group• Criticism is the healthy route to mutual support

and help • Ask fundamental questions : why, when, how &

where?• Embrace change – and compete with yourself

only


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Accounting For Business 24 October Ii