Rahul and Rohit were real brothers. Rahul was interested in Computers. His keen interest in the subject made him take up computer science for his degree course. He requested his father Mr. Dinesh for purchasing computer for his use at home. Rohit showed keen interest in his father shop situated at the nearby market place selling toys. He would often go and help his father at the shop after school hours .Mr. Dinesh was happy with the performance of Rohit but was worried about Rahul who would always spent his time with computers. He felt that with the interest of two sons they could start a flourishing business of their own. The boon in the I.T. Industry made him find ways to satisfy his son?s dreams.
After completing their studies. The brothers were drifting about due to varied interest. Dinesh decided that this is the time for him to intervene and made decision for his son?s. He asked Rohit (a commerce Graduate) to draw up a proposal for the sale. Rohit came out with following ideas;
-The area they lived on and run the shop consisted of middle and lower income group families and many of them did not possess computers at home
-Their shop could provide the following services;
--Computer Classes for varies age groups
--Computer using facilities on payments (per hour bases) and facility printing of varies documents.
--Internet access facility at the prevailing market rates by entering into the contract with Reliance Industries.
--Computer games corner for children.

Rahul intervent in between and they made up a common proposal. Rahul wanted that they purchase 20 computers and start with first two areas of operation and expand when things go well. The shop they had at the market place was a single storey building.
Their father offered to build the first floor and give it to them for their business .He spent Rs.1,20,000 on construction work and give them Rs.2,00,000 for the business .Rohit approach ICICI bank and manage to secure a loan to the extent of 75% cost of the computers (Rs.6,00,000 with printers).As the bank manager was satisfied with the proposal. He advanced the loan of Rs.4,50,000. It was agreed whether loan to be repaid will be Rs 5,40,000 including interest in annual installment as follows;
--At the end of loan?s first year Rs.1,95,000 (Rs 1,50,000+45,000 interest)
--At the end of loan?s second year Rs. 1,80,000 (Rs.1,50,000+30,000 interest)
--At the end of loan?s third year Rs. 1,65,000
(Rs.1,50,000+15,000 interest )
They started Business on 1st april,2015
Rohit decided to deposit Rs.1,80,000 in the bank. He gave Rs.1,50,000 to computer company as 25% of the value of computers purchased and Rs.4,50,000 out of bank loan awaited. He deposited Rs.1000 for the electrical connection with electricity board as security deposit . He paid a deposit of Rs.1,20,000 for internet connection. He used telephone connection at the shop , as their were two connections at the shop.
The brothers bought the computer cafe furnished, by paying Rs.20,000.Rohit bought printed leaflet at the cost of Rs.4000 and distribute it in nearby locality . All payment were made through bank .All the receipts were deposited in the bank on same day.The students on the average, pay a monthly fee of Rs. 1,000 for the 3 months evening classes .
The receipts on account of interest is Rs. 15000/month in the first quarter, on an average.
They decided to buy and sell computers stationery also like pendrives ,mouse pads etc.

Following figures were extracted from his books at the end of the first year;
1.Total Revenue (including sale of computer stationery)?Rs.5,81,200
2.Purchase of computer stationery ?Rs.50,000
3.Electricity charges?Rs.1,20,000
4.Telephone charges?Rs.30,000
5.Maintenence-Rs.13,000
6.Entertainment?Rs.12,000
7.Petty expenses?Rs.10,000
There were a helper at their father?s shop who agreed to clean up the premises of computer caf? and offered water to visiters.For these services he was paid Rs.6000/month.
The brothers withdrew Rs.2000 by cheque every month for their personal expenses .They paid the bank loan regularly.
Father was pleased by their son?s efficiency and decided to expand the business;
You are required to;
Journalise the above transactions.

Dear Student,

It seems like you have posted the complete project question. The purpose of the project is to expose the students to the real accounting practices. We suggest you to try solving this question on your own and in case you face any difficulty, then do post us your doubt. Our experts will definitely help you.

  • -22
What are you looking for?