By Group – 5
Rajeshwari Komal (60030)
Suruchi Agrawal (60041)
Surabhi Priya (60039)
Kumar Ankit (60018)
Kumar Devashish (60019)
Kumar Rohit (60021) Xytech Inc.
Submitted by Group-5
In this case, there is a company named Xytech Inc. which has been started by three partners named Able, Baker and Cabot. Their product designs were very successful and led to rapid growth of the company resulting in more need of capital to extend the growth and size of the company. In this case, major financing transactions entered into by the company for the first 10 years of its incorporation were taken into consideration.
Here, assets including cash and liabilities are recorded in a single account “A and CL” which denotes assets and current liabilities. In the year 2000, the firm began its business with 3 partners Able, Baker and Cabot each contributing capital amounting to $ 1 Lakh.
The journal entries for capital invested is
2000
Jan.1 Assets and Current Liabilities…dr 300,000 To Able, Capital a/c 100,000 To Baker, Capital a/c 100,000 To Cabot, Capital a/c 100,000
On the 1st April, 2000, the partners arranged for a five year ‘ballon’ note at 8% on $1 Lakh which meant that the firm has to pay quarterly interest for 5 years to the partners with, the principle amount due in full at the end of 5th year. The journal entries for this is,
April.1 Assets and Current Liabilities…dr
