TERM PAPER

THE PROBLEM:

You are launching into a business in the name and style of your choice. It has to be a manufacturing

business. It means that your business would involve, buying materials, transforming it using plant

& machinery, and selling it. Keep in mind the conditions given in this assignment. Strictly adhere

to the conditions.

REQUIREMENTS:

Please draw up the accounts and reports in proper form as if they were made out for a real life

business. The assignments are to be completely handwritten (Printed submission will not be

evaluated). The complete assignments are to be submitted before deadline.

CONDITIONS:

1. Date of Commencement of business will be 1st of January and the business will continue its

operations till 31st of March. One month will consist of 25 working days. There should be a

minimum of 2 transactions per day.

2. Capital to be contributed will depend on your Roll No. in the class as listed below:

 001 to 020: Your Roll No. multiplied by Rs. 60,760.

 020to 040: Your Roll No. multiplied by Rs. 3,560.

 040 to 060: Your Roll No. multiplied by Rs. 2,850.

So, Roll No 1 will have a contributed capital of Rs. 60,760.

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3. Long term loans equal of maximum of 2 times the capital available at the rate of 10% p.a. Long

term loan has to be at least equal to capital.

4. Fixed assets will vary for the different students based on their month of birth as follows:

 January- March: 25% to 50% of long term funds available.

 April- June: 51% to 60% of long term funds available.

 July to September: 61% to 70%

 October to December: 71% to 80%.

5. Depreciation on monthly basis is to be on written down value basis for all students. Life of asset

can vary between 5 to 10 years for different assets.

6. Credit sales can be four times cash sales.

7. Credit purchase can be three times cash purchase.

8. For Credit Purchase, payment will be made within 3 months.

9. For sales, amount will be realized within 2 months. 20% of the receivables will be delayed by 1

month. The receivables delayed by more than 1 month will be considered as Bad debts.

10. Provision for doubtful debts should be made at 10%.

11. Interest on long term loan is payable monthly and principal is repayable over 5 year period in

monthly installments.

12. Sales volume will increase by 10% over the previous month, sales price will increase by 5% over

the previous month and purchase price will increase by 5% every 15 days.

13. All other costs will remain stable over the period.

14. Municipal rates are to be paid at the rate of 1% of owner’s equity at the beginning of each

calendar year.

15. Wage cost could be 10% to 30% of sales.

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16. Rentals can be 5% of sales.

17. Any kind of additional expenses can be taken as per the requirement of the manufacturing

business house.

REQUIRED:

1) You are required to prepare the accounts of the business as if owned by you as an

individual proprietorship in any name and style of your choice.

2) Prepare a precise chronological statement of all transactions.

3) Prepare Journal entries for all transactions and post them to appropriate ledgers during the

first accounting period.

4) Prepare a Trial Balance, income statement and balance sheet for and or at 31/30/28 of the

month as the case may be. You have at least three financial statements.

Prepare a monthly statement showing compliance with the conditions specified.