WellStore Enterprise was incorporated by three friends, Vardhman, Gautam, and Aseemon 1 April 2011. To commence the activities, each friend introduced Rs.20,000 in cash. In addition, WellStore borrowed Rs.40,000 from the Maharashtra Cooperative Bank, giving a three-year payable date note. The note was dated 1 April 2011, and indicated an interest payable half yearly at the rate of 8% per annum. As the necessary funds were available, Vardhman made arrangements for a place of work. The shop premise was taken on a rent of Rs. 2,000 per month. As on 31 March 2012, the net profit of the firm was determined to be Rs. 20,000 after providing for rent and all other administrative and selling expenses and one payment of interest. Each friend even withdrew Rs. 4,000 in cash to meet their day-to-day expenses. Question a. What were the different sources of cash and amounts to start WellStore Enterprise?  Question b. Prepare a capital account of each friend individually, and in total for the firm as a whole, as on 31 March 2012.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

WellStore Enterprise was incorporated by three friends, Vardhman, Gautam, and Aseemon
1 April 2011. To commence the activities, each friend introduced Rs.20,000 in cash. In addition,
WellStore borrowed Rs.40,000 from the Maharashtra Cooperative Bank, giving a three-year
payable date note. The note was dated 1 April 2011, and indicated an interest payable half yearly
at the rate of 8% per annum.
As the necessary funds were available, Vardhman made arrangements for a place of work. The
shop premise was taken on a rent of Rs. 2,000 per month.
As on 31 March 2012, the net profit of the firm was determined to be Rs. 20,000 after providing
for rent and all other administrative and selling expenses and one payment of interest. Each friend
even withdrew Rs. 4,000 in cash to meet their day-to-day expenses.


Question a. What were the different sources of cash and amounts to start WellStore
Enterprise? 

Question b. Prepare a capital account of each friend individually, and in total for the firm as a whole, as on 31 March 2012.       

Expert Solution
steps

Step by step

Solved in 3 steps with 1 images

Blurred answer
Knowledge Booster
Accounting for Notes
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education