On 1st July he ordered for raw material for making an advance payment of Rs. 5 lacs.

He also submitted to an account a statement of expenses he made, during a construction period & upto the beginning of commercial production. He also bought following assets for smooth operation of business.

Furniture Fixtures Generator Computers Pre-operating Exp.

Rs. 2,43,000 Rs. 88,000 Rs. 1,23,000 Rs. 63,000 Rs. 10,000

[including registration, Day to Day exp. before commencement] He issued cheque to suppliers of assets for Rs. 4,85,000 and cash payments of Rs. 42,000 (which included 32,000 for furniture, 10,000 for pre-operating expenses) thus totaling of Rs. 52,000. All the payments were to be made by cash. All the receipts, were in cash, to be deposited in the bank on the same day. At the end of the year their result shows the following: Legal Expenses Sales Purchases Sundry debtors Sundry creditors Wages Power & Fuel Stores & Spares Salary Stationary Telephone Exp. Conveyance Travelling Exp. Rs. 27,000 Rs. 2,47,50,000 Rs. 2,03,75,000 Rs. 43,59,000 Rs. 46,80,000 Rs. 6,27,000 Rs. 7,35,000 Rs. 2,22,000 Rs.3,54,000 Rs. 28,000 Rs. 78,000 Rs. 23,000 Rs. 1,22,000

Staff Welfare Freight Outward Office maintenance Rate & Taxes Repairs & Maintenance Mis. Expenditure Insurance Bank Cash

Rs. 26,000 Rs. 5,78,000 Rs. 18,000 Rs. 14,000 Rs. 1,12,000 Rs. 38,000 Rs. 28,000 Rs. 5,79,000 Rs. 1,54,000

Adjustment:
1) Depreciation Plant & Machinery Furniture Fixtures Generator Office equipment 2) 3) 4) 5) 6) @ 15% p.a. @ 10% p.a. @ 10% p.a. @ 15% p.a. @ 60% p.a.

Pre-operating expenses are to be written of @ 20% p.a. Drawings for the year amounted Rs. 2.4 lacs. Outstanding expenses for year amounted Rs. 37,000. Closing stock is valued at Rs. 16.25 lacs at the end of the year. A provision is to be made for Audit Fee 26,000