Xavier Institute of Management, Bhubaneswar

Financial Reporting & Analysis

MBA BM 2016

Understanding the relationship among

Business decisions( BD ), Financial items ( FI ) and Financial statements ( FS )

1. X started business with cash: Rs.150000

Purchased goods on credit from Mr. Y: Rs. 50000

Purchased furniture on credit from F ltd.: Rs.25000

Sold goods costing Rs. 10000 at a profit of 25% on sales for cash.

Bought goods costing Rs. 20000 for cash.

Sold the available goods to Ms. Z on credit at a profit of 25% on cost.

Paid Salaries: Rs. 80000

Rent due but not paid: Rs. 5000

Received 75% of the money due from Ms. Z

Paid 50% of the money due to Mr. Y

Purchased 10 shares of Infosys @ Rs.2200.

Required: Convert each of the above business decision into financial transaction and reflect the same in the
Financial statements

2. Mr. A started a business on 1st January 2016. Following the transactions upto 31st March13

Date Transaction Amount

1-Jan-16 Started business with own money 500,000

10-Jan-16 Took a 12% loan from SBI 250,000

15-Jan-16 Purchased computers 50,000

25-Jan-16 Purchased 100TCS shares @1100 110,000

 30-Jan-16 Paid the following:

Rent 5,000

Electricity Charges 2,000

Internet connection charges 1,500

5-Feb-16 Sold 50% of the TCS Shares for 60,000

10-Feb-16 Purchased SBI shares 25,000

27-Feb-16 Paid the following:

Rent 5,000

Electricity Charges 2,000

Internet connection charges 1,500

10-Mar-16 Purchased the shares of AXIS Bank 50,000

25-Mar-16 Purchased Timex Shares 80,000

27-Mar-16 Sold bal 50% of the TCS Shares 55,000

Sold SBI shares 45,000

29-Mar-16 Sold Timex shares 70,000

30-Mar-16 Paid the following

Rent 5,000

Electricity Charges 2,000

Internet connection charges 1,500

Required: Record these financial transactions using accounting equation in the financial statements

3. Following are the transactions of GM Ltd.

Started business with a capital of Rs. 5,00,000. Out of the capital, Rs. 400,000 was deposited in the bank
and balance was cash in hand.

Bought furniture worth Rs. 50000 and paid by cheque.

 Bought textile on credit from Mr. M: Rs.100000

Sold 50% of the textile for Rs.75000.

Paid wages : Rs. 2000

Paid Mr. M: Rs.25000

Bought T Shirts from Tirupur: Rs.50000. Paid by cheque

Sold all Tshirts to a local retailer at Rs. 60000.

Bought stationery: Rs. 5000

Paid rent: Rs.5000

Electricity charge due but not paid: Rs.2000

Insurance premium paid by cheque: Rs. 10000

Sold 10% of the balance textile on credit to Mr. Y for Rs.7500.

Mr. Y failed to make the payment on the due date. The entire money was declared bad-debt.

Required: Convert each of the above business decision into financial transaction and reflect the same in the
Financial statements