Answer to Assignment 3. Please solve the assignment yourself and then compare the solution.

Solution: (i) The amount of capital with which Mr. Gokul Das started the business is Rs. 4,00,000. (ii) The value of fixed assets bought by him is Rs. 20,000, the amount which he paid for purchase of furniture for his office use. (iii) Since Mr. Gokul Das deals in furniture, the amount paid for the purchase of furniture meant for resale is the total value of

goods bought by him which as under: Cash Purchase Rs. 2,00,000 Credit Purchases : M/s. Steel Udyog, Guwahati Rs. 1,90,000 M/s. Modern Furniture, Jorhat Rs. 80,000Rs. 2,70,000 Total Purchases Rs. 4,70,000 (iv) Creditors are the persons/parties to whom the amount is payable on account of goods/services provided to the enterprise. Therefore, the creditors are M/s. Steel Udyog, Guwahati as some amount is still due to them. M/s. Modern

Furniture, Jorhat will not be considered as creditor at the end of the month of January because the whole amount due to them was paid. The amount payable to creditor, M/s. Steel Udyog, Guwahati at the end of January, 2012 is Rs. (1,90,000 50,000) = Rs. 1,40,000. (v) Debtors are the persons/parties from whom the amount is receivable on account of goods/services provided to them. Therefore, the debtors are State Bank of India, Digboi and J. B. College, Jorhat as the amount is still due from them.

The amount receivable from debtors are as under: State Bank of India, Digboi Rs. 1,70,000 J. B. College, Jorhat Rs. (70,00010,000)Rs. 60,000 TotalRs. 2,30,000 (vi) His total sales for the month of January, 2012: Cash SalesRs. 4,80,000 Credit Sales: State Bank of India, Digboi Rs. 1,70,000 J. B. College, Jorhat Rs. 70,000 Rs. 2,40,000 Total Sales Rs. 7,20,000

(vii) Total amount of expenses incurred during the month of January, 2012 is as under: Expenses on carriageRs. 3,000 Printing of stationery Rs. 1,200 Travelling expenses of salesman Rs. 15,000 Sundry expenses Rs. 2,000 Rent Rs. 7,000 Salary to accountant-cummanager Rs. 6,000 Salary to salesmanRs. 4,000 Total Expenses for the month of January Rs. 38,200 Note: Expenses means expenses for the business. It does not

include expenses incurred for private and domestic purposes. (viii) The amount of his drawing for the month of January, 2012: Drawings means expenses paid for private and domestic purposes out of business cash. Therefore, his drawings for the month of January, 2012 is: Rent for his residenceRs. 4,000 Sons school admission fee Rs. 6,500 Domestic expensesRs. 5,000 Rs.15,500 (ix) The value of his opening stock and closing stock:

Since Mr. Gokul Das has started his business on 1-1-2012 newly and had no goods in hand for sale, there is no opening stock. Closing stock is the value of goods lying unsold on 31st January, 2012 which is Rs. 40,000. (x) The amount of profit earned by him during the month of January, 2009 is ascertained as under: Profit = Total sales (Cost of goods sold + Expenses) Cost of goods = (Opening Stock + Purchases Closing stock) = Opening Stock : Nil + Purchases : Rs. 4,70,000

Closing Stock : Rs. 40,000 = Rs. (4,70,000 40,000) = Rs.4,30,000 Profit = Rs. 7,20,000 Rs. (4,30,000 + 38,200) = Rs. 7,20,000 Rs. 4,68,200 = Rs. 2,51,800 (xi) The amount of his capital at end the month of January, 2012 : = Capital at the beginning + Profit earned Drawings = Rs. 4,00,000 + Rs. 2,51,800 Rs.15,500 = Rs. 6,36,300.