Dubai Pet World -Grooming and Kennel Center

• Dubai Pet world Grooming and kennel centre -founded in 2007

• A profit making organization

• The company has established monopoly by being the only luxury services provider of boarding & grooming to the pets in Dubai.

• Catering the premium pet market and providing pet luxury services.

• “A boarding and grooming center that will leave your dog happy, relaxed and in great shape”.

• Product offered and services- Spacious kennels, Luxurious beds, Plush green run areas, Doggie pool and Premium Food.

Service & Products Offered

• Attending the Pets at all times of the day. They will be treated like Royalty!

• Providing quality food and Treats* as per customer specifications.

• Surveillance system ( Pet-owners can monitor the pets while doing their own work outside the Centre)

• Personal engraved Bronze Dog Charm with Genuine Swarovski Crystal.

Luxury to Pets

• Profit as of 31st Dec 2010 is AED 20,000.

• Target profit for the year 2011 is AED 50,000.

Targets

• Expansion of facilities from boarding and grooming to cemetery and Obedience training.

• Enhancing delivery of services in a professional manner.

• Marketing and Promoting value added Services*

Steps Undertaken to achieve the Targets

Dubai Pet World -Grooming and Kennel CenterBalance Sheet as on 31st Dec 2010

ASSETS

CASH AED 75,000

SUPPLIES,EQUIPMENT AED 67,500

LAND,BUILDING AED 300,000

A/C RECIEVABLES, DEBTORS

AED 5,000

TOTAL ASSETS AED 447,500

LIABILITIES

A/C PAYABLE AED 52,500

NOTE PAYABLE AED 75,000

RETAINED EARNINGS AED 20,000

OWNERS EQUITY

CAPITAL STOCK AED 300,000

TOTAL LIABILITIES AED 447,500

Transactions not recorded in the Book of Accounts

• 9th Jan - Mrs. Benz believes the company has made a loss of AED 7,000 by purchasing sofa for AED 20,000, which was also available for AED 13,000. This transaction is not to be recorded.

• 11th Jan - Mr. Harsh buys a scooter for personal use AED 2,200.

• 31st Jan - Supplies remaining at the end of the month are AED 500.

• 31st Jan - Current value of building purchased, has increased to AED 70,000.

ASSETS

CASH AED 96,300

SUPPLIES/EQUIPMENT AED 128,500

LAND/BUILDING AED 310,000

A/C RECIEVABLES, DEBTORS

AED 5,000

TOTAL ASSETS AED 539,800

LIABILITIES

A/C PAYABLE AED 79,500

NOTES PAYABLE AED 80,000

OWNERS EQUITY AED 350,000

RETAINED EARNING AED 30,300

TOTAL LIABILITIES AED 539,800

Dubai Pet World -Grooming and Kennel CenterBalance Sheet as on 31st Jan 2011

Dubai Pet World -Grooming and Kennel CenterIncome Statement for the month ended

31st Jan 2011

INCOME

EARNED INCOME AED 30,300

OPERATING EXPENSE

WAGES AED 12,000

SUPPLIES & EQUIPMENT

AED 9,000

UTILITIES AED 1,000

MISC. EXPENSE AED 3,000

TOTAL OPERATINGEXPENSE

AED 25,000

NET INCOME AED 5,300

Dubai Pet World -Grooming and Kennel CenterCash Flow Statement for the month ended

31st Jan 2011

CASH FLOW FROM OPERATING ACTIVITIES

CASH RECEIVED FROM REVENUE TRANSACTION AED 25,300

CASH PAID FOR EXPENSES (AED 16,000)

NET CASH PROVIDED BY OPERATING ACTIVITIES AED 9,300

CASH FLOW FROM INVESTING ACTIVITIES

LAND (AED 10,000)

FURNITURE (AED 8,000)

SOFA (AED 20,000)

NET CASH PROVIDED BY INVESTING ACTIVITIES (AED 38,000)

CASH FLOW FROM FINANCING ACTIVITIES

CASH FROM OWNER AED 50,000

INCREASE IN CASH FOR MONTH AED 21,300

CASH BALANCE ON 1ST JAN AED 75,000

CASH BALANCE ON 31ST JAN AED 96,300

Has the company’s position become stronger?

• Yes the company's position has improved since 31st

Dec 2010 as the retained earnings have improvedfrom AED 20,000 to AED 30,300 in Jan 2011.

• The cash reserves have also improved from AED75,000 to AED 96,300 AED in Jan 2011.

Is Shabir successful in achieving his target profit ?

Yes. Shabir has been successful in achieving histarget profit.

Reasons:

• His net income for January 2011 was AED5,300. If the same progress continues, thenthe company can expect to make an annualprofit of AED 63,600.

Principles of Accounting

Scenario A:

Conservatism Concept:

• It says, if the market value of goods purchaseddecreases, stock will be shown at cost price in books,but if market value increases, then the gain in value isnot to be recorded until stock is sold.

• Here market value of land & building increases to AED70,000. However, only the original cost price of thebuilding has to be recorded in the books, when it waspurchased, until they are sold off for the new value.

Scenario B:

Cost Concept:

• It says, only the purchase price will berecorded in the books of accounts.

• Here sofa is bought for AED 20,000. Even if itis available in the market for less amount,those facts are not to be recorded orconsidered in the book of accounts.