Question

In: Accounting

You are planning to buy a residential property of Rs. 5 crores at a desired location....

You are planning to buy a residential property of Rs. 5 crores at a desired location. The property is always the one you wanted to have as a new home. Before you start a deal with the broker and the bank, you would like to analyse the current financial position. As you have other obligations to meet, with the current salary you would like to know the loan to be taken and how much can be considered from the personal finances. This process of managing one’s personal finances will help you identify your assets and liabilities and thus a decision whether to buy the residential property or should wait for the near future can be taken. Prepare a financial statement of you as an individual based on your income, expenses, assets and liabilities in a proper format. (Require to provide at least 10 different types of transactions for the purpose of this assignment).

We do not need excel sheet. Answer should be in word format only

a. Identify the transactions that took place in the financial year 2019 – 2020

b. Prepare Profit and Loss Account and Balance Sheet of you as an individual indicating clearly your income, expenses in profit and loss account and assets and liabilities in your balance sheet. (You have been inherited an amount of Rs. 1 crore from your grandfather. Consider this as opening capital for the financial year 2019 – 2020)

Expert Solution

Answer to Part a

The 10 different transactions that took place in the financial year 2019 – 2020 can be:

1. Bought medical insurance plan for the family and paid Rs. 30,000 as annual premium for 19-20.

2. Salary credited to account from employer Rs. 30,00,000 for the year.

3. Purchased a Maruti car valuing Rs. 5,00,000. Paid down payment of Rs. 1,00,000. Balance to be paid in next year fully.

4. Invested in shares of blue chip companies for Rs. 10,00,000 in stock market.

5. Paid for home utilities and child education for the year Rs. 3,00,000.

6. Took a home loan from ICICI Bank for Rs. 2 Crores.

7. Donated Rs. 1,00,000 in a charitable trust for benefit of old age people.

8. Received dividend from shares held for Rs. 1,00,000.

9. Received cash gifts from relatives on anniversary for total Rs. 5,00,000.

10. Purchased a Gold ring for Rs. 5,00,000.

Answer to Part b

ekkarill92 answered 2 years ago

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