CASE : I Ani Initiatives

Madam Ani, located in Nagpur, started a new business entity and a new office in Bangalore under the
name of Ani Initiatives. The company employed Bhola Reddy as a Manager and was intended to take up
small projects related to data tabulation and portfolio consultation.

No

Date

Events/Transactions (with details)

1.

11-Dec-09

Ani gives Bhola Rs 66,000 to start the Bangalore office of Ani

Initiatives (part of Rs. 1,00,000 capital)

2.

11-Dec-09

Ani purchases Railway tickets for Bhola to Bangalore worth Rs 1,000

12-Dec-09

Compaq Presario Laptop Purchased for Bangalore office worth Rs

55,110 from D-Mart Computers (Receipt No 333). Bhola goes hitech

12-Dec-09

Computer Accessories (Mouse) purchased for office worth Rs 416

from D-Mart Computers (Receipt No 335)

13-Dec-09

Ani gives Bhola Rs 8,000 to start the Bangalore office of Ani

Initiatives (Part of capital; paid thru wire transfer via ICICI)

13-Dec-09

Purchased HP Printer for office worth Rs 7,999 from D-Mart

Computers (Receipt No 395)

13-Dec-09

Computer Accessories (Pendrive and cable wire) purchased for office

worth Rs 3,107 from D-Mart Computers (Receipt No. 395)

13-Dec-09

Bhola Monthly Salary Rs 1,000 paid

16-Dec-09

Internet Connection Installation fees worth Rs 1,000 from Tata

Indicom Broad-band

10

16-Dec-09

Internet Connection Deposit to Tata Indicom Broadband Rs 2,000

11

22-Dec-09

Ani gives Bhola Rs 27,000 as part of Ani Initiatives (part of capital;

Paid via ICICI wire transfer)

12

25-Dec-09

Bhola is paid extra Salary for Completion of Data Entry of YFA

project Rs 1,500

13

31-Dec-09

Internet Bill paid to Tata Indicom Broadband Rs 850 (Bill No

DSL/14638)

14

31-Dec-09

Bhola Monthly Salary Rs 1,000 paid

15

2-Jan-10

Internet Bill paid to Tata Indicom Broadband Rs 850 (Bill No

DSL/15739)
16

30-Jan-10

Ani gives Bhola Rs 15,000 to increase capital to Rs. 1,15,000 of Ani

Initiatives (Paid via SBI transfer to Bhola)

17

31-Jan-10

Bhola Monthly Salary Rs 2,000 paid

18

2-Feb-10

Internet Bill paid to Tata Indicom Broadband Rs 850 (Bill No

DSL/18291)

19

4-Feb-10

Income earned from portfolio consultancy Rs 9,500

20

5-Feb-10

Internet Bill paid to Tata Indicom Broadband Rs 850 (Bill No

DSL/19893) for extra use

21

7-Feb-10

Commodities Market Training Fees of Rs 15,000 to Bhola

(Wellingkar Management Institute Receipt No 1637)

22

15-Feb-10

Travel Expenses of Rs 1,500 to Bhola (Reimbursement for Training

related traveling)

23

21-Feb-10

Bhola Monthly Salary Rs 1,000 paid

24

22-Feb-10

Internet Bill paid to Tata Indicom Broadband Rs 850 (Bill No

DSL/21542)

25

23-Feb-10

Commodities Market Training Fees of Rs 500 to Bhola (Wellingkar

Management Institute Receipt No 1183)

26

26-Feb-10

Ani Initiatives accepts business from Avinash, takes an advance of Rs

9,000 for research data tabulation (Parliament project)

27

28-Feb-10

Bhola Monthly Salary Rs 2,000 paid

28

1-Mar-10

Ani gives a loan of Rs 15,000 to Ani Initiatives (Paid via SBI transfer
to Bhola)

29

2-Mar-10

Internet Bill paid to Tata Indicom Broadband Rs 850 (Bill No DSL /

20430)

30

5-Mar-10

Income earned from portfolio consultancy Rs 11,400 (payment

received from Gopal, SBI Ch No. 598738)

31

5-Mar-10

Bhola portfolio incentive Rs 5,700 (cash paid)

32

10-Mar-10

Income earned from portfolio consultancy Rs 4,000 (payment

received from Siddharth, SBI Ch No 598248)

33

10-Mar-10

Bhola portfolio incentive Rs 2,000 (cash paid)

34

10-Mar-10

Income billed from portfolio consultancy Rs 10,600 to Gopal

35

24-Mar-10

Payment received from Gopal worth Rs. 10,600 (through ICICI Bank

cheque)
36

24-Mar-10

Ani Initiatives settles this amount with the loan balance of Ani Rs
10,600 (as agreed)

37

31-Mar-10

Bhola Monthly Salary Rs 2000

Depreciation is applicable as per the local Tax Act. It is known to be 60% on Computer and accessories.

Required:

1.

Ani would like to know the financial position of Ani Initiatives after each transaction. Prepare a
position statement after each transaction.
2. Did Ani Initiatives make a profit or loss as at the end of the accounting period? Do you suggest
Ani to reconsider the new business initiative?
3. Describe the main the accounting principle(s) applied in recording each transaction.

Ani Initiatives Limited

JOURNAL
DATE

PARTICULARS

DEBIT

CREDIT

F
11-12-09
11-12-09
12-12-09
12-12-09
13-12-09
13-12-09
13-12-09
13-12-09
16-12-09
16-12-09
22-12-09
25-12-09
31-12-09
31-1209
2-01-10
30-01-10
31-01-10
2-02-10
4-02-10
5-02-10
7-02-10
15-02-10
21-02-10
22-02-10

Cash
To Capital
Travel expense
To Capital
Computer
To Cash
Computer
To Cash
Cash
To Capital
Printer
To Cash
Computer
To Cash
Salary Expenses
To Cash
Internet Expense
To Cash
Deposit
To Cash
Cash
To Capital
Salary Expense
To Cash
Internet Expense
To Cash
Salary Expense
To Cash
Internet Expense
To Cash
Bank
To Capital
Salary Expense
To Cash
Internet Expense
To Cash
Bank
To Income
Internet Expense
To Cash
Training Expense
To Cash
Travel Expense
To Cash
Salary Expense
To Cash
Internet Expense

Dr.

66,000
66,000

Dr.

1,000
1,000

Dr.

55,110
55,110

Dr.

416
416

Dr.

8,000

Dr.

7,999

Dr.

3,107

Dr.

1,000

Dr.

1,000

Dr.

2,000

Dr.

27,000

Dr.

1,500

Dr.

850

8,000
7,999
3,107
1,000
1,000
2,000
27,000
1,500
850
Dr.

1,000
1,000

Dr.

850
850

Dr.

15,000

Dr.

2,000

15,000
2,000
Dr.

850
850

Dr.

9500
9,500

Dr.

850
850

Dr.

15,000

Dr.

1,500

Dr.

1,000

Dr.

850

15,000
1,500
1,000

23-02-10
26-02-10
28-02-10
1-03-10
2-03-10
5-03-10
5-03-10
10-03-10
10-03-10
10-03-10
24-03-10
24-03-10
31-03-10
31-03-10
31-03-10
2

To Cash
Training Expense
To Cash
Cash
To Advance From Customer
Salary Expense
To Cash
Bank
To Loan
Internet Expense
To Cash
Bank
To Income
Salary Expense
To Cash
Bank
To Income
Salary Expense
To Cash
Receivable
To Income
Bank
To Receivable
Loan
To Bank
Salary Expense
To Cash
Depreciation Expense2
To Accumulated Depreciation Computer
Depreciation Expenses3
To Accumulated Depreciation Printer

850
Dr.

500
500

Dr.

9,000
9,000

Dr.

2,000
2,000

Dr.

15,000
15,000

Dr.

850

Dr.

11,400

Dr.

5,700

Dr.

4,000

Dr.

2,000

Dr.

10,600

850
11,400
5,700
4,000
2,000
10,600
Dr.

10,600

Dr.

10,600

10,600
10,600
Dr.

2,000
2,000

Dr.

17,590

Dr.

2,400

17,590
2,400

As per the Income Tax Act, if an asset is used for a period of less than 180 days, half of the depreciation
is to be charged on that asset.
3
As per the Income Tax Act, if an asset is used for a period of less than 180 days, half of the depreciation
is to be charged on that asset.

Date

Particulars
To Trf to Balance Sheet

Capital Account
Amount
Date
Particulars
(in Rs.)
1,17,000
By Cash
By Travelling Exp
By Cash
By Cash
By Bank
1,17,000

Amount
(in Rs.)
66,000
1,000
8,000
27,000
15,000
1,17,000

Bank Account
Date

Particulars
To Capital Account
To Consultancy Income
To Loan
To Consultancy Income
To Consultancy Income
To Receivable

Amount
(in Rs.)
15,000
9,500
15,000
11,400
4,000
10,600
65,500

Date

Particulars
By Loan
By Balance

Amount
(in Rs.)
10,600
54,900

65,500

SalaryAccount
Date

Particulars
To Cash
To Cash
To Cash
To Cash
To Cash
To Cash
To Cash
To Cash
To Cash

Amount
(in Rs.)
1,000
1,500
1,000
2,000
1,000
2,000
5,700
2,000
2,000
18,200

Date

Particulars
By P&L Account

Amount
(in Rs.)
18,200

18,200

Security Deposit
Date

Particulars

Amount
(in Rs.)

Date

Particulars

Amount
(in Rs.)

To Cash

2,000
2,000

By Trf to Balance Sheet

2,000
2,000

Travelling Expenses
Date

Particulars
To Capital
To Cash

Amount
(in Rs.)
1,000
1,500
2,500

Date

Particulars
By P&L Account

Amount
(in Rs.)
2,500
2,500

Depreciation Expenses
Date

Particulars
To Comp. & Acc.(Computer)
To Comp. & Acc.(Printer)

Amount
(in Rs.)
17,590
2,400
19,990

Date

Particulars
By P&L Account

Amount
(in Rs.)
19,990
19,990

Consultancy Income Account

Date

Particulars
To P&L Account

Amount
(in Rs.)
35,500
______
35,500

Date

Particulars
By Bank
By Bank
By Bank
By Receivable

Amount
(in Rs.)
9,500
11,400
4,000
10,600
35,500

Cash Account
Date

Particulars
To Capital
To Capital
To Capital
To Advance

Amount
(in Rs.)
66,000
8,000
27,000
9,000

Date

Particulars
By Computer
By Computer
By Computer
By Computer
By Salary
By Internet Installation
By Security Deposit
By Salary
By Internet Expenses
By Salary
By Internet Expenses
By Salary
By Internet Expenses
By Internet Expenses
By Training & Develop
By Travelling Expenses
By Salary
By Internet Expenses
By Training & Develop
By Salary
By Internet Expenses
By Salary
By Salary
By Salary
By Balance

1,10,000

Amount
(in Rs.)
55,110
416
7,999
3,107
1,000
1,000
2,000
1,500
850
1,000
850
2,000
850
850
15,000
1,500
1,000
850
500
2,000
850
5,700
2,000
2,000
68
1,10,000

Accounts Receivable
Date

Particulars
To Consultancy Income

Amount
(in Rs.)
10,600
10,600

Date

Particulars
By Bank

Amount
(in Rs.)
10,600
10,600

Training and Development Expenses

Date

Particulars
To Cash

Amount
(in Rs.)
15,000

Date

Particulars
By P&L Account

Amount
(in Rs.)
15,500

To Cash

500
15,500

15,500

Computer and accessories

Date

Particulars
To Cash
To Cash
To Cash
To Cash

Amount
(in Rs.)
55,110
416
7,999
3,107
66,632

Date

Particulars
Depreciation (Computer)
Depreciation (Printer)
By Balance to B/S

Amount
(in Rs.)
17,590
2,400
46,642
66,632

Internet Expenses
Date

Particulars
To Cash
To Cash
To Cash
To Cash
To Cash
To Cash
To Cash

Amount
(in Rs.)
1,000
850
850
850
850
850
850
6,100

Date

Particulars
By P&L Account

Amount
(in Rs.)
6,100

6,100

Advance received
Date

Particulars
To Trf to Balance Sheet

Amount
(in Rs.)
9,000
9,000

Date

Particulars
By Cash

Amount
(in Rs.)
9,000
9,000

Loan Account
Date

Particulars
To Bank
To Balance Sheet

Amount
(in Rs.)
10,600
4,400
15,000

Date

Particulars
By Cash

Amount
(in Rs.)
15,000
15,000

Ani Initiatives Limited

Trial balance as on March 31st, 2010
Account
Cash
Bank
Deposit
Computer
Printer
Depreciation
Advance from Customer
Loan
Capital
Income
Travel Expense
Salary Expense
Internet Expense
Training Expense
Accumulated Depreciation

Debit (Rs.)
68
54,900
2,000
58,633
7,999
19,990

Credit (Rs.)

9,000
4,400
1,17,000
35,500
2,500
18,200
6,100
15,500
1,85,890

19,990
1,85,890

Ani Initiatives Limited

Profit and loss a/c.
For the period March 31st, 2010
Expenses
Travel Expenses

Amount (Rs.)
2,500

Salary Expenses
Internet Expense
Training Expenses
Depreciation Expenses

18,200
6,100
15,500
19,990

Total Expenses

62,290

Income
Income from
Operations

Amount
35,500

Unadjusted Loss
Total Income

26,790
62,290

Liabilities

Ani Initiatives Limited

Balance sheet
as at March 31st, 2010
Amount (in Rs.) Assets

Advance from Customer

Loan
Capital

9,000
4,400
1,17,000

Cash
Bank
Receivable
Deposit
Computer
Less: Accumulated
Depreciation
Printer
Less: Accumulated
Depreciation

Amount (in
Rs.)
68
54,900
0
2,000
58,633
17,590
7,999

41,043
5,599

2,400

Losses Carried Forward

26,790

Total Liabilities

_______
1,30,400

Total Assets

***********

1,30,400