• ACKNOWLEDGEMENT• I would like to convey my heartfelt thanks

to----------------, my Accounts Teacher who always gave valuable suggestions and guidance for completion of my project. She/He helped me to understand and remember important details of the project. She/He helped me and gave her guidance in completing of my project successfully.

•  • CERTIFICATE

• • This is to certify that---------, student of

Class XII, Section------- of this school has completed her project file under my supervision. She/He has take proper care and shown utmost sincerely in completion of this project. I further certify that this project is upto my expectation and as per guidelines issued by CBSE.

• COMPREHENSIVE PROJECT PROBLEM• KHANNA SOFTWARE LIMITED

• After working for over a decade in leading software company, K.K. Khanna and his wife Sheela decided to set up their own software firm, Khanna Software Limited on June 1. Each of them deposited Rs. 20,000 in a bank account in the name of the company in exchange for 2,000 shares of Rs. 10 each. They followed the practice of depositing in the bank all amounts received from customers and making all payment by cheque. On June 2, Amit Lal, an old friend of K.K. Khanna joined the company as Office Manager on a monthly salary of Rs. 3,500 regardless of the number of days he attended office. Although Lal had no knowledge of accounting, he was methodical in filling letters, invoices and other papers. He put all the purchase invoices in a file. Also, he noted down details of cheques received and issued in a diary. The following information is available from the file and diary kept by Lal. On June 1, the Khanna Software Limited borrowed Rs. 24,000 from the bank. The same day, they ordered computer costing Rs. 50,000. An advance of Rs. 20,000 was paid with the order and the balance amount was to be paid in there equal installments on the fifth of every month beginning July. The computer was received on June 6. On June 2, they hire an office room on a monthly rental of Rs. 2,600 payable on the first day of the month. The rent for June was paid in full immediately, two programming assistants were appointed on June3. Each of them was to be paid Rs. 280 per day for the actual number of days worked.

In June, the company billed customers for Rs. 52,800 for programming services, cheques totaling Rs. 25,200 were received from customers on account. In addition, a Cheque for Rs. 3,200 was given by a customer as payment for services to be provided in July. During the month the company ordered supplies on credit for Rs. 8,200. Of these supplies costing Rs. 4,340 were received on June 8 and the remaining items were delivered on July3. One box of floppy disk costing Rs. 980 differed slightly from the purchase specifications all other items were as ordered and were paid for June 16. On June 27, the supplier informed Lal that he was willing to give a discount of Rs. 80 on the floppy disks to make up for the deviation. The proposal was accepted and the amount was paid on July 4. On June 29, the bank loan was repaid with interest of Rs. 240. On June 30, an electricity bill for Rs. 760 was received but this could be paid only on July 1.During the month, the company had twenty one working days. While one of the Assistant reported for work on all working days, the other worked for only seventeen days. The salaries of the Assistants and Manager were paid on June 30. The June 30th Inventory of supplies was figured to be about Rs. 3,200.

• Required :-• • Prepare the Trial Balance, Profit & Loss Account & Balance-sheet of Khanna

Software Ltd. As per schedule VI of the Companies Act ‘1956.• • The Khanna Software Ltd. Proposes to declare and pay a divided of Rs, 5 per

share because they have cash in excess of Rs. 30,000. Comment on the proposal.• • Prepare the Pie Diagrams to represent the Current Assets and Debit side of Profit

& Loss Account.• • Comment on the Profitabilities and Liquidities of the company with the help of

suitable ratios.• • Prepare Cash Flow Statement by direct method according to AS-3(revised).• • Show various Cash Flows (Operating, Investing and Financing) by using Bar

Diagrams.•