Kim fuller

It is a case study of Kim Fuller, who was working in a large chemical firm as a District Sales Engineer HE learned that company had developed use for the recycled material in pulverized form.
Although there is a possibility of both profit and loss, We have seen profit.
Please see rest of the details in following slides.

1. Kim Fuller A Case Study in Managerial Accounting Thanks to: Dr Ashish C. Mehta Presented by: Mayur Fofandi Omkar Mishra Amit Raj Singh Nitish Kumar Saurabh Makwana

2. INTRODUCTION Kim Fuller, who was working in a large chemical firm as a District Sales Engineer HE learned that company had developed use for the recycled material in pulverized form. In November 2006, he checked for initial cost of the business. For that he bought a truck, three trailers, two grinding machine & supplies and parts to run and maintain the business.

3. He also purchased a computer warehouse, accounting software. He also invested his savings of $75,000. He borrowed $90,000 from his two sisters and a brother for down payment of $50,000 for warehouse. He also hired a truck driver and grinding machine workers. He took help of his neighbors for learning & purchasing of accounting software. He obtained enough knowledge for recording transactions from his neighbor.

4. CONCEPT USED Dual aspect concept: The  dual aspect concept  states that every business transaction requires recordation in two different accounts. This  concept  is the basis of double entry accounting. Accrual concept: Accrual concept  is the most fundamental principle of accounting which requires recording revenues when they are earned and not when they are received in cash, and recording expenses when they are incurred and not when they are paid. Money measurement concept: means only those transactions and events that are capable of being  measured  in  monetary  terms are recognized in the financial statements.

5. ACCOUNTING INFORMATION Owned capital was of $75,000 from his savings. Acquired used truck and 3 trailers, grinding machine, machine part, personal computer for total of $65,000. Borrowed $90,000 from two sisters and brother for down payment of building. Warehouse of $162,000 and paid $50,000 as its down payment.

6. NON-ACCOUNTING INFORMATION Fuller think to start a business of plastic bottles. In Nov 2006, he started to find out the cost involved in setting up the business Found a warehouse. Approval of mortgage from bank for balance of building. Learnt maintaining books of accounts for bank dealings, tax returns and general management of the company. List out the purchased items, debts and other information in Accounting Software. Fuller signed contract with two bottling companies and started business by companies and hiring grinding machine workers and a truck driver.

7. OPENING BALANCE SHEET OF KIM FULLER as of 01 st April 20 10 (figures in $) Assets Amounts Liabilities Amounts Current Assets Owner’s equity 75,000 Cash/ Bank 50,000 Current Liabilities Stock 2,000 Family loan 90,000 Mortgage loan (against Wearhouse) 1,12,000 Non – Current Assets Fixed assets 63,000 Warehouse 1,62,000 Total 2,77,000 Total 2,77,000

8. Working statement Fuller savings 70,000 +Sibling investment 90,000 -Equipment cost (65,000) - Warehouse deposit (50,000) Cash/ Bank 50,000 Mortgage warehouse costing 1,62,000 - Deposit (50,000) Mortgage 1,12,000

9. TRANSACTIONS Purchased raw material worth $1,000. Carriage inward $50. Paid wages to workers and truck driver. Depreciation on Fixed Assets @10%, $6,300. Purchased accounting software 100 Interest payable for mortgage loan @5%, $5,600. Interest payable to the relatives for the borrowed loan @3%, $2,700. Ware house building appreciated @10%, $16,200. Sales made worth $4,000 (cost price Sales made worth $4,000 (cost price $2,500. Closing Stock at the end of year $500.

10. Income Statement of Kim Fuller for the year ended 2010-11 (figures in$) Receipts Amount Sales revenue 4,000 Appreciation on building 16,200 (A) Total 20,200 Expenses Amount Wage paid 1000 Depreciation on fixed asset 6300 Interest on mortgage 5600 Interest on relative’s loan 2700 Carriage inwards 50 (B) Total 15650 Net income (A-B) 4550

11. Trading and Profit and Loss Account for the period ending Particulars Total Particular Total To Opening capital By Sales To Purchase By Closing stock To Gross profit To selling and distribution expenses By Gross Profit b/d To administrative expenses By interested received To depreciation and maintenance By discount received To financial expenses By commission received To abnormal losses To net profit transferred to capital

12. CLOSING BALANCE SHEET OF KIM FULLER as on 31 st March 2011 (figures in $) Assets Amount Liabilities Amount Current account Owners equity 77,050 Cash/ bank 51,850 Other liabilities 2,10,300 Closing stock 5,00 Non-current assets Fixed assets 63,000 (-) Deprecation 6,300 56700 Warehouse 1,62,000 (+) Appreciation 16,200 1,78,200 Accounting software 100 Total 2,87,350 Total 2,87,350

13. ANALYSIS STATEMENT To determine profit and loss, Fuller needs to consider all the expenses incurred and incomes earned by the business. The expenses would include all trade expenses and office expenses, which are debited. The incomes would include all operating and non-operating incomes, which are credit Kim Fuller should ideally do such an analysis on a quarterly basis as the business is young and small.