We plan to start a business of Trading in computer.

Shop to be taken on Lease rental Basis, Rent = 20000

Security Deposits: 2 Lakhs
Furnitures, Computer & Printer: 2 Lakhs
Purchase of Computers for trading: 50 Computers @ Rs 30,000/- each
Projected / Budgeted Financials: 25 lakhs

Sources:
Own Capital: Rs 15 Lakhs
Borrowed from SBI: 10 lakhs
(Own + Borrowed capital is known as Capital Employed)

Purchased 50 computers @ 3000 1,500,000

Debit: Purchases Account 1,500,000
Credit: Bank 1,500,000
Purchased a computer for office:
Debit: Computer Account 50,000
Credit: Bank 50,000

Purchased 50 computers @ 30000 each by paying Rs 10 Lakhs and balance on credit

Debit: Purchases Account 1,500,000
Credit: Bank 1,000,000
Credit Supplier of Computer (XY 500,000

Purchase Account
Dr
SBI 50C@30k 1500000

Dr. Bank 4lakhs dr. COGS 3 lakhs

Cr. Sales 4lakhs Cr. Purchases 3 lakhs
 BALANCE SHEET
SOURCE
CAPITAL 1,500,000
LOAN 1,000,000 Income Statement
Supplier (XYZ) 500,000 Sales 400000 Credit Income
Profit 100,000 Less: Purchases 300000 Expenses
TOTAL 3,000,000 =Profit 100000 Profit
APPLICATION
SBI Account 1,850,000 P & L Statement
Computer 50,000 Sales 400000
Purchases 1,200,000 COGS 300000

TOTAL 3,100,000 Profit 100000

 Capital Account SBI Account
Dr Cr Dr Cr
SBI 1,500,000 Capital 1,500,000
Loan from Bank 1,000,000

Debit SBI 1500000 (Capital a/c owes a credit to sbi) (SBI Bank a/c is indebted to capital)
Credit Capital 1500000

Bank Loan Account Purchase Account

Dr Cr Dr Cr
SBI 1,000,000

Debit SBI 1500000

Credit Capital 1500000
ted to capital)
 BALANCE SHEET
SOURCE
CAPITAL 1,500,000
LOAN 1,000,000
TOTAL 2,500,000
APPLICATION
BANK SBI 950,000
Computer 50,000
Purchases 1,500,000

TOTAL 2,500,000
 BALANCE SHEET
SOURCE
CAPITAL 1,500,000
LOAN 1,000,000
Supplier (XYZ) 500,000

TOTAL 3,000,000
APPLICATION
SBI Account 1,450,000
Computer 50,000
Purchases 1,500,000

TOTAL 3,000,000
1. Capturing the Business Decisions
i. Raise fund
a. Own Source: Rs 15 Lakhs
b. Bank: 10 Lakhs
Open a Bank Account in SBI Bank
Double Book Keeping Accounti
All sources are liabilities
Profit is liability owed to the ow

Sources: Own or Borrowed

ii. Invest the Fund
Double Book Keeping Accounting
All sources are liabilities
Profit is liability owed to the owner
Transaction

1. Credit the Source

2. Debit the User
Brought in Rs 15 Lakh as a Capital

Took a bank loan of Rs 10 Lakhs from SBI

Sale of 10 computers @ Rs 40,000 each for cash
Debit: Bank 400,000
Credit:Purchases (Computers) 300,000
Credit: Profit 100,000