Question
Mr Kalra who took a loan from Bank Rs 33, 00,000 @10% per annum wanted to start a company dealing with oxygen concentrators, Mr Kalra
Mr Kalra who took a loan from Bank Rs 33, 00,000 @10% per annum wanted to start a company dealing with oxygen concentrators, Mr Kalra purchased 6 Machines of Rs 5,00,000 each and kept Rs. 3,00,000 for working capital requirements. Initially he managed all his business affairs from his residence and hired sufficient number of workers and one Personal Assistant. He is not an expert of accounting, but a bunch of information which he has given for his financial transactions is as follows:
I. All the six concentrators were hired out to 6 corporate clients at rent of Rs 4,00,000 per annum per concentrator. II. Six technicians were hired with a consolidated pay package of Rs 9000 per month /per technician. III. During the year he paid in cash an average maintenance expense of Rs 8000 per month/ per machine. IV. At end of year Rs 2,16000 were yet to be paid for maintenance expenses. V. Being the first year of operations machines didnt required any repairing. VI. Average life span of each machine was estimated as 5 years with 10 percent salvage at the end. VII. As per the scheme of Government he was required to pay 15 percent of the net profit earned as taxes.
You are Required to 1) Evaluate and comment on the financial performance and 2) Financial Status of his Company.
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