Mr. Ali who is a qualified auto engineer established an auto-workshop for repair of automobiles. He also hired the services of two auto mechanics. Following transactions were conducted during the month of March, 2020:- 02. Brought cash of Rs. 200,000 a

To address your request, let's go step-by-step through the accounting process for Mr. Ali's auto workshop using the transactions provided for March 2020. 

### Part 1: Record the transactions in the general journal

**General Journal for March 2020**

| Date       | Account Title                      | Debit (Rs.) | Credit (Rs.) |
|------------|------------------------------------|-------------|--------------|
| 02         | Cash                               | 200,000     |              |
|            | Auto Tools                        | 150,000     |              |
|            | Owner's Capital                    |             | 350,000      |
|            | (To record capital introduced by owner) |         |              |
| 04         | Repair Supplies                    | 30,000      |              |
|            | Cash                               |             | 30,000       |
|            | (To record purchase of repair supplies) |       |              |
| 05         | Repair Supplies Expense             | 3,800       |              |
|            | Repair Supplies                    |             | 3,800        |
|            | (To record supplies consumed for repairs) |       |              |
| 06         | Cash                               | 26,000      |              |
|            | Repair Revenue                     |             | 26,000       |
|            | (To record cash collected from customers) |      |              |
| 08         | Auto Tools                        | 30,000      |              |
|            | Cash                               |             | 30,000       |
|            | (To record purchase of additional tools) |       |              |
| 10         | Cash                               | 23,000      |              |
|            | Repair Revenue                     |             | 23,000       |
|            | (To record cash collected from customers) |      |              |
| 12         | Accounts Receivable                | 32,000      |              |
|            | Repair Revenue                     |             | 32,000       |
|            | (To record billing institutional clients) |       |              |
| 14         | Cash                               | 15,000      |              |
|            | Accounts Receivable                |             | 15,000       |
|            | (To record cash collected from credit customers) | |              |
| 17         | Repair Supplies Expense             | 12,000      |              |
|            | Repair Supplies                    |             | 12,000       |
|            | (To record additional supplies consumed) |       |              |
| 20         | Cash                               | 18,000      |              |
|            | Repair Revenue                     |             | 18,000       |
|            | (To record cash collected from clients) |      |              |
| 24         | Utilities Expense                  | 21,000      |              |
|            | Cash                               |             | 21,000       |
|            | (To record payment of the electricity bill) |  |              |
| 26         | Repair Supplies                    | 18,000      |              |
|            | Accounts Payable                   |             | 18,000       |
|            | (To record purchase of supplies on credit) |  |              |
| 30         | Salaries Expense                   | 60,000      |              |
|            | Cash                               |             | 60,000       |
|            | (To record payment of salaries)    |             |              |
| 31         | Owner's Draw                       | 40,000      |              |
|            | Cash                               |             | 40,000       |
|            | (To record owner's withdrawal)     |             |              |

### Part 2: Post the transactions in the ledger accounts

**Ledger Accounts:**

1. **Cash**

| Date       | Description                          | Debit (Rs.) | Credit (Rs.) | Balance (Rs.) |
|------------|--------------------------------------|-------------|--------------|----------------|
| 02         | Capital                              | 200,000     |              | 200,000        |
| 04         | Supplies Purchase                    |             | 30,000       | 170,000        |
| 06         | Repair Revenue                       | 26,000      |              | 196,000        |
| 08         | Tools Purchase                       |             | 30,000       | 166,000        |
| 10         | Repair Revenue                       | 23,000      |              | 189,000        |
| 14         | Accounts Receivable                  | 15,000      |              | 204,000        |
| 20         | Repair Revenue                       | 18,000      |              | 222,000        |
| 24         | Utilities Expense                    |             | 21,000       | 201,000        |
| 30         | Salaries Expense                     |             | 60,000       | 141,000        |
| 31         | Owner's Draw                         |             | 40,000       | 101,000        |

2. **Repair Supplies**

| Date       | Description                          | Debit (Rs.) | Credit (Rs.) | Balance (Rs.) |
|------------|--------------------------------------|-------------|--------------|----------------|
| 04         | Supplies Purchase                    | 30,000      |              | 30,000         |
| 05         | Supplies Expense                     |             | 3,800        | 26,200         |
| 17         | Supplies Expense                     |             | 12,000       | 14,200         |
| 26         | Supplies Purchase on Credit          | 18,000      |              | 32,200         |

3. **Repair Revenue**

| Date       | Description                          | Debit (Rs.) | Credit (Rs.) | Balance (Rs.) |
|------------|--------------------------------------|-------------|--------------|----------------|
| 06         | Cash                                 |             | 26,000       | 26,000         |
| 10         | Cash                                 |             | 23,000       | 49,000         |
| 12         | Accounts Receivable                  |             | 32,000       | 81,000         |
| 20         | Cash                                 |             | 18,000       | 99,000         |

4. **Utilities Expense**

| Date       | Description                          | Debit (Rs.) | Credit (Rs.) | Balance (Rs.) |
|------------|--------------------------------------|-------------|--------------|----------------|
| 24         | Cash                                 | 21,000      |              | 21,000         |

5. **Salaries Expense**

| Date       | Description                          | Debit (Rs.) | Credit (Rs.) | Balance (Rs.) |
|------------|--------------------------------------|-------------|--------------|----------------|
| 30         | Cash                                 | 60,000      |              | 60,000         |

6. **Owner's Capital**

| Date       | Description                          | Debit (Rs.) | Credit (Rs.) | Balance (Rs.) |
|------------|--------------------------------------|-------------|--------------|----------------|
| 02         | Cash                                 |             | 200,000      | 200,000        |
|            | Tools                                |             | 150,000      | 350,000        |
| 31         | Draw                                 | 40,000      |              | 310,000        |

### Part 3: Prepare a trial balance

**Trial Balance as of March 31, 2020**

| Account                          | Debit (Rs.) | Credit (Rs.) |
|----------------------------------|-------------|--------------|
| Cash                             | 101,000     |              |
| Repair Supplies                  | 32,200      |              |
| Accounts Receivable              | 17,000      |              |  (32,000 - 15,000) |
| Utilities Expense                | 21,000      |              |
| Salaries Expense                 | 60,000      |              |
| Owner's Draw                     | 40,000      |              |
| Repair Revenue                   |             | 99,000       |
| Owner's Capital                  |             | 310,000      |
| Accounts Payable                 |             | 18,000       |
| Total                            | 271,200     | 271,200      |

### Part 4: Prepare the following statements

#### a) Income Statement

**Income Statement for March 2020**

| Description                       | Amount (Rs.) |
|-----------------------------------|---------------|
| Total Revenue                     | 99,000        |
| Cost of Supplies                  | (15,800)      |  * (3,800 + 12,000)*
| **Gross Profit**                  | **83,200**    |
| Operating Expenses:               |               |
| Utilities Expense                 | 21,000        |
| Salaries Expense                  | 60,000        |
| **Net Income**                   | **2,200**     |

#### b) Statement of Owner’s Equity

**Statement of Owner’s Equity for March 2020**

| Description                       | Amount (Rs.) |
|-----------------------------------|---------------|
| Opening Capital                   | 350,000       |
| Add: Net Income                   | 2,200         |
| Less: Owner's Draw                | (40,000)      |
| **Ending Capital**                | **312,200**   |

#### c) Balance Sheet

**Balance Sheet as of March 31, 2020**

| Assets                             | Amount (Rs.) | Liabilities & Equity              | Amount (Rs.) |
|------------------------------------|---------------|-----------------------------------|---------------|
| Cash                               | 101,000       | Accounts Payable                  | 18,000        |
| Repair Supplies                   | 32,200        |                                   |               |
| Accounts Receivable                | 17,000        | Owner's Capital                   | 312,200       |
| **Total Assets**                  | **150,200**   | **Total Liabilities & Equity**    | **150,200**   |

### d) Cash Flow Statement

**Cash Flow Statement for March 2020**

| Description                       | Amount (Rs.) |
|-----------------------------------|---------------|
| **Cash Flow from Operating Activities:** |               |
| Cash received from Customers      | 101,000       |
| Cash paid for supplies            | (30,000)      |
| Cash paid for salaries            | (60,000)      |
| Cash paid for utilities           | (21,000)      |
| Cash withdrawn by owner           | (40,000)      |
| **Net Cash Flow**                | **(50,000)**  |

### Part 5: Performance Analysis

**Performance Assessment:**

From the Income Statement, we see that the auto workshop generated a total revenue of Rs. 99,000 but incurred expenses amounting to Rs. 96,800. After subtracting these expenses, Mr. Ali has a net income of Rs. 2,200. 

While the business is showing a profit, the net income is relatively small compared to the total revenue. The workshop should consider increasing revenues, possibly by attracting additional customers or increasing service prices, or reducing costs (salaries and utilities) to improve profitability. 

Overall, since the workshop is profitable but only marginally so, it can be concluded that the business should be continued, but improvements should be made to enhance its profitability. 

Please let me know if you need more details on any part!

Update (2024-09-29):
Let's go through each of the requested tasks step by step.

### 1) Record the Transactions in the General Journal

The general journal entries for the transactions based on the provided information are as follows:

| Date  | Account Title                             | Debit (Rs.) | Credit (Rs.) |
|-------|------------------------------------------|-------------|--------------|
| Mar 2 | Cash                                     | 200,000     |              |
|       | Auto Tools                               | 150,000     |              |
|       |     Owner's Equity                       |             | 350,000      |
|-------|------------------------------------------|-------------|--------------|
| Mar 4 | Repair Supplies                          | 30,000      |              |
|       |     Cash                                 |             | 30,000       |
|-------|------------------------------------------|-------------|--------------|
| Mar 5 | Repair Supplies Expense                  | 3,800       |              |
|       |     Repair Supplies                      |             | 3,800        |
|-------|------------------------------------------|-------------|--------------|
| Mar 6 | Cash                                     | 26,000      |              |
|       |     Repair Revenue                       |             | 26,000       |
|-------|------------------------------------------|-------------|--------------|
| Mar 8 | Tools                                    | 30,000      |              |
|       |     Cash                                 |             | 30,000       |
|-------|------------------------------------------|-------------|--------------|
| Mar 10| Cash                                     | 23,000      |              |
|       |     Repair Revenue                       |             | 23,000       |
|-------|------------------------------------------|-------------|--------------|
| Mar 12| Accounts Receivable                      | 32,000      |              |
|       |     Repair Revenue                       |             | 32,000       |
|-------|------------------------------------------|-------------|--------------|
| Mar 14| Cash                                     | 15,000      |              |
|       |     Accounts Receivable                  |             | 15,000       |
|-------|------------------------------------------|-------------|--------------|
| Mar 17| Repair Supplies Expense                  | 12,000      |              |
|       |     Repair Supplies                      |             | 12,000       |
|-------|------------------------------------------|-------------|--------------|
| Mar 20| Cash                                     | 18,000      |              |
|       |     Repair Revenue                       |             | 18,000       |
|-------|------------------------------------------|-------------|--------------|
| Mar 24| Utilities Expense                        | 21,000      |              |
|       |     Cash                                 |             | 21,000       |
|-------|------------------------------------------|-------------|--------------|
| Mar 26| Repair Supplies                          | 18,000      |              |
|       |     Accounts Payable                     |             | 18,000       |
|-------|------------------------------------------|-------------|--------------|
| Mar 30| Salaries Expense                         | 60,000      |              |
|       |     Cash                                 |             | 60,000       |
|-------|------------------------------------------|-------------|--------------|
| Mar 31| Owner's Drawings                        | 40,000      |              |
|       |     Cash                                 |             | 40,000       |

### 2) Post the Transactions in the Ledger Accounts

**Cash Account**
| Date | Description         | Debit (Rs.) | Credit (Rs.) | Balance (Rs.) |
|------|---------------------|-------------|--------------|---------------|
| Mar 2| Initial Capital     | 200,000     |              | 200,000       |
| Mar 4| Repair Supplies     |             | 30,000       | 170,000       |
| Mar 6| Repair Revenue      | 26,000      |              | 196,000       |
| Mar 8| Tools               |             | 30,000       | 166,000       |
| Mar 10| Repair Revenue     | 23,000      |              | 189,000       |
| Mar 14| Accounts Receivable | 15,000      |              | 204,000       |
| Mar 20| Repair Revenue     | 18,000      |              | 222,000       |
| Mar 24| Utilities Expense   |             | 21,000       | 201,000       |
| Mar 30| Salaries Expense    |             | 60,000       | 141,000       |
| Mar 31| Drawings            |             | 40,000       | 101,000       |

**Repair Supplies Account**
| Date | Description         | Debit (Rs.) | Credit (Rs.) | Balance (Rs.) |
|------|---------------------|-------------|--------------|---------------|
| Mar 4| Purchase            | 30,000      |              | 30,000        |
| Mar 5| Consumption         |             | 3,800        | 26,200        |
| Mar 17| Consumption        |             | 12,000       | 14,200        |
| Mar 26| Purchase           | 18,000      |              | 32,200        |

**Repair Revenue Account**
| Date | Description         | Debit (Rs.) | Credit (Rs.) | Balance (Rs.) |
|------|---------------------|-------------|--------------|---------------|
| Mar 6| Cash Collection      |             | 26,000       | 26,000        |
| Mar 10| Cash Collection     |             | 23,000       | 49,000        |
| Mar 12| Billing Institutional|             | 32,000       | 81,000        |
| Mar 20| Cash Collection      |             | 18,000       | 99,000        |

**Utilities Expense Account**
| Date | Description         | Debit (Rs.) | Credit (Rs.) | Balance (Rs.) |
|------|---------------------|-------------|--------------|---------------|
| Mar 24| Electricity Bill    | 21,000      |              | 21,000        |

**Salaries Expense Account**
| Date | Description         | Debit (Rs.) | Credit (Rs.) | Balance (Rs.) |
|------|---------------------|-------------|--------------|---------------|
| Mar 30| Salaries Paid      | 60,000      |              | 60,000        |

**Owner's Equity/Drawings Account**
| Date | Description         | Debit (Rs.) | Credit (Rs.) | Balance (Rs.) |
|------|---------------------|-------------|--------------|---------------|
| Mar 2 | Capital             |             | 350,000      | 350,000       |
| Mar 31| Withdrawals         | 40,000      |              | 310,000       |

**Accounts Receivable Account**
| Date | Description         | Debit (Rs.) | Credit (Rs.) | Balance (Rs.) |
|------|---------------------|-------------|--------------|---------------|
| Mar 12| Billed Institutional | 32,000      |              | 32,000        |
| Mar 14| Collection          |             | 15,000       | 17,000        |

**Accounts Payable Account**
| Date | Description         | Debit (Rs.) | Credit (Rs.) | Balance (Rs.) |
|------|---------------------|-------------|--------------|---------------|
| Mar 26| Purchase on Credit  |             | 18,000       | 18,000        |

### 3) Prepare a Trial Balance

**Trial Balance as of March 31, 2020**

| Account Title                  | Debit (Rs.) | Credit (Rs.) |
|--------------------------------|-------------|--------------|
| Cash                           | 101,000     |              |
| Repair Supplies                | 32,200      |              |
| Accounts Receivable            | 17,000      |              |
| Tools (Auto Tools)            | 150,000     |              |
| Utilities Expense              | 21,000      |              |
| Salaries Expense               | 60,000      |              |
| Owner's Drawings               | 40,000      |              |
| Repair Revenue                 |             | 99,000       |
| Owner's Equity                 |             | 310,000      |
| Accounts Payable               |             | 18,000       |
| **Total**                     | **421,200** | **421,200**  |

### 4) Prepare the Statements

**a) Income Statement for the Month Ended March 31, 2020**

| Description                 | Amount (Rs.) |
|-----------------------------|---------------|
| Repair Revenue              | 99,000        |
| Less: Repair Supplies Expense| (15,800)      |
| Less: Utilities Expense       | (21,000)      |
| Less: Salaries Expense        | (60,000)      |
| **Net Income**               | **2,200**     |

**b) Statement of Owner’s Equity for the Month Ended March 31, 2020**

| Description                   | Amount (Rs.) |
|-------------------------------|---------------|
| Owner's Equity, Beginning     | 350,000       |
| Add: Net Income                | 2,200         |
| Less: Owner's Withdrawals      | (40,000)      |
| **Owner's Equity, Ending**    | **312,200**   |

**c) Balance Sheet as of March 31, 2020**

| Assets                                  | Amount (Rs.) |
|-----------------------------------------|---------------|
| Cash                                    | 101,000       |
| Repair Supplies                         | 32,200        |
| Accounts Receivable                     | 17,000        |
| Tools                                   | 150,000       |
| **Total Assets**                       | **300,200**   |

| Liabilities                             | Amount (Rs.) |
|-----------------------------------------|---------------|
| Accounts Payable                        | 18,000        |
| **Total Liabilities**                   | **18,000**    |

| Owner's Equity                          | Amount (Rs.) |
|-----------------------------------------|---------------|
| Owner's Equity, Ending                  | 312,200       |
| **Total Liabilities and Equity**        | **330,200**   |

### d) Cash Flow Statement for the Month Ended March 31, 2020

**Cash Flows from Operating Activities:**
| Description               | Amount (Rs.) |
|---------------------------|---------------|
| Cash received from Revenue | 99,000        |
| Cash paid for Supplies     | (60,800)      |
| Cash paid for Salaries     | (60,000)      |
| Cash paid for Utilities     | (21,000)      |
| **Net Cash Flow from Operating Activities** | **(42,800)** |

**Cash Flows from Investing Activities:**
| Description               | Amount (Rs.) |
|---------------------------|---------------|
| Tools purchased            | (30,000)      |
| **Net Cash Flow from Investing Activities** | **(30,000)** |

**Cash Flows from Financing Activities:**
| Description               | Amount (Rs.) |
|---------------------------|---------------|
| Owner's Equity             | 350,000       |
| Owner's Withdrawals        | (40,000)      |
| **Net Cash Flow from Financing Activities** | **310,000** |

**Total Net Cash Flow** | **(13,800)**

### 5) Discussion on Performance

**Profitability:**
- The net income for the workshop for the month of March 2020 is Rs. 2,200 which indicates that the workshop was profitable.

**Cash Position:**
- However, in terms of cash flow, the workshop recorded a net cash outflow of Rs. (13,800). This could be a concern as higher operating expenses and investments in supplies and tools impacted the cash position negatively.

**Recommendation:**
- Overall, while the workshop is generating initial profits, the cash flow situation indicates that careful monitoring of cash expenses and operations might be necessary. 
- Given the potential for profitability if expenses are managed properly, the business should be continued, but it would benefit from optimizing cash management strategies to improve liquidity. 

The owner should also consider budgeting for future months to avoid cash shortfalls. Adjusting the purchase pattern of repair supplies and expenditures on tools could mitigate cash flow issues while maintaining operational efficiency.