Introduction

Meena, decided to start business of st

fashion garments under the name of
Meena and Designer Wear from 1 April, 2022. She had savings of
Rs.10,00,000. She invested Rs.3,00,000 out of her savings. She
purchased a commercial space of 500sq. feet for Rs.5,00,000. The space
so purchased was suitably renovated to make it ready as showroom. She
purchased furniture and fixtures for Rs.75,000. She started business on
1st April,2022 getting it registered under Goods and Services Tax (GST).
In view of capital requirement, she further deposited Rs.2,00,000 in the
bank. She paid security deposits of Rs.5,000 for the electric connection
with BSBS Power Ltd. And Rs.2,000 to MTLN for telephone
connection. Furniture for Rs.10,000 was purchased further.
Financial Statements of Meena

Meena and Designer Wear

TRADING AND PROFIT AND LOSS ACCOUNT for the year
ended 31st March, 2023

Dr. Cr.

Particulars Amount Particulars Amount

To Purchases 17,00,000 By Sales 20,00,000
To Gross Profit 8,50,000 By Closing 5,50,000
c/d Stock
25,50,000 25,50,000
To Electricity 60,000 By Gross 8,50,000
Expenses Profit b/d
To Telephone 50,000
Charges
To Travelling 45,000
Expenses
To Business 5,000
Promotion
Expenses
To Maintenance 25,000
Expenses
To Miscellaneous 15,000
Expenses
To Cartage 60,000
Outwards
To Interest 33,300
To Depreciation 33,500
To Net Profit 5,23,200
transferred to
Capital A/c
8,50,000 8,50,000

BALANCE SHEET as on 31st March,2023

Liabilities Amount Assets Amount
Capital 9,63,200 Building 5,00,000 4,75,000
5,00,000 Less: Depreciation
Less: 25,000
Drawings
60,000
Add: Net
Profit
5,23,200
Bank Loan 2,40,000 Furniture and 76,500
Fixtures 85,000
Less: Depreciation
8,500
Electricity 20,000 Security 5,000
Expenses Deposits(Electricity)
Payable
Security 2,000
Deposits(Telephone)
Closing Stock 5,50,000
Cash At Bank 1.14,700
12,23,20 12,23,200
0

Ranjeet gupta started his clinic in New Delhi, guptas Clinic introducing
Rs.5,50,000 as capital. He deposited the cheque in bank account in the
name of guptas Clinic in Axis Bank. Enclosed herewith are the original
papers relating to his transactions and other information related to the
profession/business for the month of August,2022.
Financial Statements of Ranjeet
PROFIT AND LOSS ACCOUNT for the period
1st August,2021 to 31st August,2022
Dr. Cr.
 Particulars Amount Particulars Amount
To Purchases 60,000 By Medical 1,82,700
Consultancy
Service
To Gross Profit c/d 2,19,700 By Medical 80,200
Dispensing
By Closing Stock 16,800
2,79,700 2,79,700
To Legal Charges 20,000 By Gross Profit b/d 2,79,700
To Recruitment 18,000
Expenses
To Banner and 6,000
Boards
To Printing and 40,000
Stationery
To Renovation 20,000
Expenses
To Miscellaneous 30,000
Expenses
To Salary 40,000
To Depreciation 1,275
To Net Profit 44,425
transferred to
Capital A/c
2,19,700 2,19,700
Get Well Clinic
BALANCE SHEET as on 31st March,2023
Liabilities Amount Assets Amount
Capital 5,50,00 5,54,425 Ultrasound 62,475
Add: Net Profit Machine
44,425
India Medico 60,000 Furniture and 44,250
Ltd. Fixtures
Outstanding 40,000 Security for 1,00,000
Salary Premises
Telephone 7,000
Security
Closing Stock 16,800
Cash in Hand 20,000
Cash at Bank 4,43,900
6,94,425 6,94,425
COMPARISON OF BOTH FINAL ACCOUNTS OF BOTH
SOLE TRADERS
The gross profits of both Meena and Designer Wear and guptas
Clinic are 25,50,000 and 2,19,700 respectively. The net profits
are 5,23,200 and 44,425 respectively. Both have 3 liabilities
respectively. Meena and Designer Wear has 6 assets(1 fixed
asset and 5 current assets) and Guptas Clinic has 7 assets(2 fixed
assets and 5 current assets).

RESEARCH REPORT
If I was to invest in the 2 above companies I would choose to
invest in Meena and Designer Wear because they can diversify
their investments, I can have some influence in the company and
can earn a return on investment. If any of the 2 companies
approached the bank for a loan I think M/s Designer Wear will
be able to easily get the finance because they have larger gross
and net profits than Guptas Clinic and can cover their losses
effectively than Guptas Clinic. The maximum funds Meena and
Designer Wear can borrow is- 10,00,000 and the maximum
funds Get Well Clinic can borrow is- 5,00,000.

REFLECTION QUESTIONS
Q-1 Identify 3 unique items you found in the financial
statements of the companies.
Answer-1 The 3 unique items I found in the financial statements
of the companies are:
• Cartage Outwards- Meena and Designer Wear
• Security for Premises- guptas Clinic
• Telephone Security- guptas Clinic

Q-2 List 2 items you think needs immediate attention by the

management
Answer-2 The 2 items I think need immediate attention by the
management are:
• Purchases
• Capital

Q-3 Mention 1 thing you like the most about that company
Answer-3 The thing I liked the most about Meena and Designer
Wear is that they had a good amount of savings and they utilised
those savings effectively. The thing I liked the most about
Guptas Clinic is that the clinic is doing well as per their medical
consultancy records .