Profit and Loss

Debit Amount Credit Amount

To bank interest 500 By sales 236000
To rent account 5000 By Bank int 350
To Salary to tailors 15000
To selling expenses 12000
To COGS 87000

Calculation for the interest payment

Principal amount of loan 60000
Interest per year (@10%) 6000
Monthly interest amount 500

Assumptions:
Bank interest is paid directly through the bank account
All other payments are made through cash account until unless specifically mentioned to be paid by bank
 Balance Sheet

Machinery 90,000

Cash 168,000
Current Account with IDBI Bank 702,850
Steel Racks and Wooden counter 180,000
Inventory of raw materials 63,000
Accounts Receivables 108,000

Long term loan (5years) 60,000

Accounts Payable 45,000

Capital 1,090,000

paid by bank