Tally Fundamentals

4.3 Creation/ Setting up of Company in Tally

The first step towards understanding Tally is to create a company in Tally. Create a company using
the Company Creation screen.
4.3.1 Creation of a Company
Go to Gateway of Tally > Company Info > Create Company.

The Company Creation screen appears as shown

Figure 4.2 Company Creation screen

Each of the fields in the Company Creation screen is explained below. To navigate between the
fields, use the Enter key, the Tab key, the arrow keys or the mouse.

COMPANY CREATION – UNIVERSAL BUSINESS SOLUTIONS

Field description Data to be entered
Directory: Tally assumes that the company is to Accept what is displayed on the screen.
be created in the data path given in the Tally.INI
file, which is displayed by default. However, you
can change this path on the screen so Tally saves
the data to a different directory.
Name: Enter the name of the company. Universal Business Solutions.

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 Tally Fundamentals

Mailing Name: Usually, Company Name and the Universal Business Solutions.
Mailing Name are the same, but Tally allows a
different mailing name where needed.
Address: Fill in the company address details. No.18, Roosevelt Road, Sector-4, Banga-
The address field is optional. lore.
Note:Tally picks up the mailing name and address details in any report, which needs to have
the company name and address such as balance sheets, statement of accounts, etc.
State: Select the appropriate state from the List Select Karnataka from the ‘List of States’
of States. displayed.
PIN Code: Enter the PIN code of the specified 560018.
address. This field is optional
E-mail Address: E-mail address will be used to [email protected].
e-mail documents, reports and data from Tally.
This field is optional.
Use Indian VAT?: Set to Yes for the companies No.
which are located in the state where VAT is appli-
cable. If VAT is not applicable, the field is set to
No.
Applicable From: Enter the date from which VAT --
is applicable
Note: Only if VAT is activated, the field Applicable From appears on the screen.
VAT TIN: Enter the VAT TIN number. The Tax- Skips field automatically.
payer’s Identification Number (TIN) consists of 11
digits. The first two digits represent state code as
used by the Union Ministry of Home Affairs. This
field is optional.
Local Sales Tax number: Enter the local sales Skip field – do not enter any details.
tax number. The local sales tax number refers to
the registration number allotted by Local (State)
Sales Tax Authorities. The details given here con-
tain of a number and the date of registration. This
information, if given, can be printed on invoices.
This field is optional. It is automatically skipped if
VAT is enabled.
Inter-state Sales Tax number: Enter the inter-
state sales tax number. The interstate sales tax Skip field – do not enter any details.
number refers to the registration number allotted
by Central Sales Tax Authorities. The details
given here comprise of a number and the date of
registration. This information, if given, can be
printed on invoices. This field is optional.

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Tally Fundamentals

Income Tax number: Enter the income tax Skip field – do not enter any details.
number. The Income Tax Number is the number
allotted by the Income Tax Authorities. In India,
this could be the Permanent Account Number
that comprises 10 digits and may be alphanumer-
ical. This field is optional.
Currency Symbol: Tally displays Rs. by default. Rs. (pre-defined).
This cannot be modified at the time of the crea-
tion of the company.
Maintain: This field is used to specify which sec- Accounts Only.
tions of Tally your company would like to use.
Tally displays two options – Accounts Only and
Accounts with Inventory.

MAINTAIN
Option Description
Accounts only Only Financial Accounts of the company.
Accounts-with-Inventory Both Financial Accounts and Inventory
Records of the company.

Figure 4.3 Company Creation Screen - Maintain field sub-window

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 Tally Fundamentals

Financial year from: This field is used to specify 1-4-2004.

the Financial Year (FY) for the company. Tally
considers 12 months from the date which is given
here as the financial year. For example, if you
give 1st April 2001, your FY will be April 1, 2001
to March 31, 2002.
Books beginning from: The date given for 1-4-2004..
"Financial Year From" is automatically displayed.
This can be changed to the actual date on which
the books of accounts are opened.
TallyVault Password (if any): TallyVault is a Skip field – do not enter any details.
facility to keep the data protected using a pass-
word. Once the password is set, data is main-
tained permanently in an encrypted form. This
field is optional.
Note: TallyVault Password feature needs to be used with care for if the password is lost, all
data maintained in Tally becomes irrecoverable.
Use security control: Tally has a range of secu- No.
rity controls, which can define the authority of var-
ious users to access the information and to enter/
alter/delete the vouchers. This field is optional.
Base Currency Information: By default, the Skips the field automatically.
information is pre-set and the same cannot be
altered or modified at the time of creation of the
company. However, after the creation, this infor-
mation can be modified by activating the Multi-
Currency feature in F11.

BASE CURRENCY INFORMATION

Detail Description
Base currency symbol Pre-set as a default currency - Rs. (as
specified earlier)
Formal name Complete name for the currency symbol.
By default, this is set to Indian Rupees.
Number of decimal places By default, this is set to 2.
Show amounts in millions? Tally caters to currencies where the differ-
ent parts of large amounts are called by
special names. By default, this is set to No

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Tally Fundamentals

Is symbol suffixed to amounts? By default, this is set to No. For example,

in India, we place the ‘Rs’ symbol in front
of amounts.
Put a space between amounts and symbol? By default, this is set to Yes.

The completed Company Creation screen appears shown

Figure 4.4 Company Creation Screen - completed

Accept the screen to create the company Universal Business Solutions.

32 © Tally Solutions Pvt Ltd 1988-2005

Appendix

a.i List of Transactions

i Sample Exercise
Nandini Kapur’s transactions for the year 2004-05 are as follows. You are required to
‡ Record the transactions.
‡ Prepare financial statements.

LIST OF TRANSACTIONS – LEVEL 1 – YEAR 1

SL. NO DATE TRANSACTIONS
APRIL 2004
1) 1-4-2004 Nandini Kapur started Universal Business Solutions by bringing in
cash of Rs.3,00,000.
2) 2-4-2004 Ms. Kapur paid Rs.22,500 in cash to purchase a computer with pre-
loaded Tally 7.2. The computer does not have any disposal value at
the end of its useful life of four years. All assets are to be depreciated
using the straight-line method.
3) 3-4-2004 Ms. Kapur opened a bank account with HDFC Bank, Bangalore for
the firm by depositing cash of Rs.1,00,000.
4) 4-4-2004 Ms. Kapur had rented an office space for Rs.2,500 per month on
April 1, 2004 and has now paid security deposit of Rs.25,000 by
cheque.
5) 5-4-2004 Ms. Kapur hired Maya Nair as Manager – operations on a monthly
salary of Rs.7,500. She also hired Vijay Narayan as Assistant Man-
ager – marketing on a monthly salary of Rs.4,500.
6) 10-4-2004 Ms. Kapur made arrangement with Raj Travels so that at regular
intervals she will receive bills for cab hire charges and tour
expenses.

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7) 15-4-2004 Ms. Kapur issued cheques and purchased the following fixed assets.
1. A cell phone for office usage for Rs.6,000 (useful life 5 years).
2. Furniture for Rs.20,000 (useful life 8 years).
3. An Air conditioner for Rs.20,000 (useful life 6 years).
4. Electrical Fittings for Rs.15,000 (useful life 10 years).
The assets do not have any disposal value at the end of their useful
life.
8) 16-4-2004 Ms. Kapur obtained a mobile phone subscription with Planet Tele-
communications Ltd. by paying a deposit of Rs.3,000 in cash.
9) 20-4-2004 Ms. Kapur purchased stationery consumables worth Rs.12,500 from
Global House on credit.
10) 21-4-2004 Ms. Kapur entered into a contract with Silver Services for providing
consultancy services at an agreed price of Rs.75,000. She received
an advance of Rs.25,000 by cheque.
11) 23-4-2004 Ms. Kapur deposited Rs.50,000 cash in HDFC Bank.
12) 25-4-2004 Ms. Kapur received an invoice for Rs.6,000 raised by Ink and Paper
Publishers for printing of office stationery.
13) 27-4-2004 Ms. Kapur withdrew Rs.7,500 cash for personal use.
14) 30-4-2004 Ms. Kapur paid Rs.750 in cash towards office maintenance charges
for April 2004.
MAY 2004
15) 1-5-2004 Ms. Kapur paid Rs.6,000 in cash to Ink and Paper Publishers.
16) 5-5-2004 Ms. Kapur paid Rs.2,500 by cheque towards office rent for April
2004.
17) 6-5-2004 Ms. Kapur paid salaries through cheque for Apri 2004 (25 days) to
1. Maya Nair ˆ Rs.6,500.
2. Vijay Narayan ˆ Rs.3,900.
18) 7-5-2004 Ms. Kapur received and paid mobile phone bill amounting to
Rs.1,250 in cash for April 2004.
19) 10-5-2004 Ms. Kapur issued cheque of Rs.12,500 to Global House.

20) 12-5-2004 Ms. Kapur paid Rs.1,100 in cash towards electricity charges for April
2004.
21) 14-5-2004 Ms. Kapur received further advance of Rs.25,000 from Silver Serv-
ices by cheque.
22) 15-5-2004 Ms. Kapur reimbursed conveyance bills amounting to Rs.650 in cash
to Vijay Narayan.

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23) 18-5-2004 Ms. Kapur paid Rs.150 in cash towards miscellaneous office
expenses.
24) 20-5-2004 Ms. Kapur received Rs.15,000 of consulting revenue in cash from
Omega Infotech.
25) 25-5-2004 Ms. Kapur raised an invoice for Rs.75,000 on Silver Services after
completion of the service. Silver Services paid the balance amount of
Rs.25,000 in cash after deducting the advance paid.
26) 28-5-2004 Ms. Kapur withdrew Rs.6,000 cash for personal use.

JUNE 2004
27) 3-6-2004 Ms. Kapur paid Rs.2,500 in cash towards office rent for May 2004.
28) 4-6-2004 Ms. Kapur paid salaries by cheque for May 2004.

29) 5-6-2004 Ms. Kapur received an invoice for Rs.5,500 from Raj Travels. This
includes Rs.2,300 towards cab hiring charges and Rs.3,200 towards
outstation tours undertaken by her.
30) 9-6-2004 Ms. Kapur received Rs.35,000 in cash as consulting revenue from
Eateries Food Chain.
31) 10-6-2004 Ms. Kapur deposited Rs.30,000 cash in HDFC Bank.

32) 15-6-2004 Ms. Kapur paid mobile phone bill amounting to Rs.1,350 by cheque
for May 2004.
33) 16-6-2004 Ms. Kapur reimbursed conveyance bills amounting to Rs.750 in cash
to Vijay Narayan.
34) 20-6-2004 Ms. Kapur paid Rs.1,250 in cash towards electricity bill charges for
May 2004.
35) 21-6-2004 Ms. Kapur paid Rs.750 in cash towards office maintenance charges
for May 2004.
36) 23-6-2004 Ms. Kapur paid Rs.3,000 in cash as salary advance to Maya Nair.

37) 27-6-2004 Ms. Kapur withdrew Rs.6,000 cash for personal use.

JULY 2004
38) 3-7-2004 Ms. Kapur raised an invoice for Rs.65,000 on Alfatech Solutions for
services provided.

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39) 6-7-2004 Ms. Kapur subscribed for the ‘Management Consultant’ journal by
paying Rs.2,400 by cheque. The subscription period is from July
2004 to June 2006.
40) 7-7-2004 Ms. Kapur paid salaries for June 2004 by cheque. Salary advance
paid to Maya Nair is adjusted against the salary paid.
41) 10-7-2004 Ms. Kapur paid office rent by cheque for June 2004.
42) 15-7-2004 Ms. Kapur received Rs.35,000 by cheque from Alfatech Solutions.
43) 18-7-2004 Ms. Kapur paid Rs.750 in cash towards office maintenance charges
for June 2004.
44) 19-7-2004 Ms. Kapur paid Rs.850 in cash towards electricity charges for June
2004.
45) 20-7-2004 Ms. Kapur paid Rs.1,650 by cheque as mobile phone bill charges for
June 2004.
46) 25-7-2004 Ms. Kapur reimbursed conveyance bills for Rs.550 in cash to Vijay
Narayan.
47) 28-7-2004 Ms. Kapur withdrew Rs.6,500 cash for personal use.
AUGUST 2004
48) 1-8-2004 Ms. Kapur paid by cheque Rs.6,000 for insurance of fixed assets.
The period of insurance is from August 1, 2004 to July 31, 2005.
49) 2-8-2004 Ms. Kapur received Rs.30,000 in cash as consulting revenue from
WorldX Multimedia.
50) 5-8-2004 Ms. Kapur paid salaries for July 2004 by cheque.
51) 10-8-2004 Ms. Kapur paid office rent for July 2004 by cheque.
52) 12-8-2004 Ms. Kapur withdrew Rs.25,000 cash from HDFC Bank.
53) 14-8-2004 Ms. Kapur paid Rs.750 in cash towards office maintenance charges
for July 2004.
54) 16-8-2004 Ms. Kapur raised an invoice for Rs.50,000 on MediaLive Productions
for services provided. The terms of credit are 30 days.
55) 18-8-2004 Ms. Kapur paid Rs.950 in cash towards electricity charges for July
2004.
56) 20-8-2004 Ms. Kapur paid Rs.2,100 by cheque towards mobile phone bill
charges for July 2004.
57) 21-8-2004 MediaLive Productions settled the bill for a final amount of Rs.48,000
by paying Rs.20,000 in cash and Rs.28,000 by cheque.
58) 27-8-2004 Ms. Kapur withdrew Rs.7,000 cash for personal use.
59) 28-8-2004 Ms. Kapur received Rs.30,000 by cheque from Alfatech Solutions.
60) 29-8-2004 Ms. Kapur reimbursed conveyance bills amounting to Rs.1,200 in
cash to Vijay Narayan.

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 Appendix

SEPTEMBER 2004
61) 2-9-2004 Ms. Kapur paid Rs.3,800 in cash for repairs and maintenance of
office premises.
62) 5-9-2004 Ms. Kapur paid salaries for August 2004 by cheque. Since Maya Nair
was on leave for 15 days, she was paid one half-month’s salary.
63) 8-9-2004 Ms. Kapur paid office rent for August 2004 by cheque.
64) 9-9-2004 Ms. Kapur received invoice for Rs.7,600 from Raj Travels. This
includes Rs.3,150 towards cab hiring charges and Rs.4,450 towards
outstation tours undertaken by her.
65) 12-9-2004 Ms. Kapur paid Rs.750 in cash towards office maintenance charges
for August 2004.
66) 15-9-2004 Ms. Kapur received Rs.25,000 in cash as consulting revenue from
Cam and Cut Productions.
67) 17-9-2004 Ms. Kapur paid Rs.1,300 in cash towards electricity charges for
August 2004.
68) 20-9-2004 Ms. Kapur reimbursed conveyance bills amounting to Rs.500 in cash
to Vijay Narayan.
69) 23-9-2004 Ms. Kapur paid Rs.10,000 by cheque to Raj Travels.
70) 24-9-2004 Ms. Kapur paid Rs.1,750 by cheque towards mobile phone bill
charges for August 2004.
71) 28-9-2004 Ms. Kapur withdrew Rs.5,500 cash for personal use.
OCTOBER 2004
72) 3-10-2004 Ms. Kapur received Rs.50,000 by cheque as consulting revenue
from Xceed International Couriers.
73) 5-10-2004 Ms. Kapur paid office rent for September 2004 by cheque.
74) 7-10-2004 Ms. Kapur withdrew Rs.30,000 cash from HDFC bank.
75) 8-10-2004 Ms. Kapur paid salaries for September 2004 by cheque.
76) 10-10-2004 Ms. Kapur paid Rs.750 in cash towards office maintenance charges
for September 2004.
77) 12-10-2004 Ms. Kapur purchased stationery items worth Rs.1,600 in cash.
78) 15-10-2004 Ms. Kapur received Rs.15,000 in cash as consulting revenue from
Samaritan Products.
79) 18-10-2004 Ms. Kapur paid Rs.1,700 in cash towards electricity charges for Sep-
tember 2004.
80) 20-10-2004 Ms. Kapur paid Rs.2,300 by cheque towards mobile phone bill
charges for September 2004.
81) 23-10-2004 Ms. Kapur introduced further capital into the firm by bringing in cash
of Rs.1,00,000.
82) 24-10-2004 Ms. Kapur deposited cash amounting Rs.75,000 in HDFC bank.

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Appendix

83) 26-10-2004 Ms. Kapur reimbursed conveyance bills amounting to Rs.1,600 in

cash to Vijay Narayan.
84) 28-10-2004 Ms. Kapur entered into a contract with Planet Consultancy for provid-
ing services at an agreed price of Rs.35,000. An advance of
Rs.10,000 was received by cheque.
NOVEMBER 2004
85) 1-11-2004 Ms. Kapur withdrew Rs.8,000 cash for personal use.
86) 2-11-2004 Ms. Kapur received an invoice for Rs.7,200 from Raj Travels. This
includes Rs.2,800 towards cab hiring charges and Rs.4,400 towards
outstation tours undertaken by her.
87) 5-11-2004 Ms. Kapur paid salaries for October 2004 by cheque.
88) 8-11-2004 Ms. Kapur paid Rs.750 in cash towards office maintenance charges
for October 2004.
89) 10-11-2004 Ms. Kapur received Rs.27,500 by cheque as consulting revenue
from Trishul Software Solutions.
90) 12-11-2004 Ms. Kapur paid office rent for October 2004 by cheque.
91) 15-11-2004 Planet Consultancy terminated the contract and advance of
Rs.10,000 was refunded to them by cheque.
92) 20-11-2004 HDFC bank intimated to Ms. Kapur that the cheque of Trishul Soft-
ware Solutions for Rs.27,500 has bounced. Intimation to this effect
was sent to Trishul Software Solutions and they promised to pay the
amount in few days.
93) 21-11-2004 Ms. Kapur paid Rs.950 in cash towards electricity bill charges for
October 2004.
94) 23-11-2004 Ms. Kapur received Rs.12,500 in cash from Trishul Software Solu-
tions.
95) 25-11-2004 Ms. Kapur paid Rs.1,470 by cheque towards mobile phone bill
charges for October 2004.
96) 27-11-2004 Ms. Kapur reimbursed conveyance bills amounting to Rs.900 in cash
to Vijay Narayan.
97) 30-11-2004 Ms. Kapur withdrew Rs.6,500 cash for personal use.
DECEMBER 2004
98) 3-12-2004 The statement received from HDFC Nank shows that the bank has
charged Rs.550 as cheque bouncing charges and Rs.330 as cheque
book charges. Cheque bouncing charges are to be recovered from
Trishul Software Solutions.
99) 5-12-2004 Ms. Kapur paid office rent for November 2004 by cheque.
100) 6-12-2004 Ms. Kapur paid salaries for November 2004 by cheque.

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 Appendix

101) 8-12-2004 Ms. Kapur received invoice from Raj Travels for Rs.6,200. This
includes Rs.3,000 towards cab hiring charges and Rs.3,200 towards
outstation tours undertaken by her.
102) 9-12-2004 Ms. Kapur received Rs.50,000 by cheque as Consulting Revenue
from Unigrand Technologies.
103) 10-12-2004 Ms. Kapur withdrew Rs.30,000 cash from HDFC Bank.
104) 11-12-2004 Ms. Kapur paid Rs.750 in cash towards office maintenance charges
for November 2004.
105) 15-12-2004 Ms. Kapur purchased Rs.12,000 worth office equipments on credit
from Transform Tech Pvt. Ltd. The asset does not have any disposal
value after its useful life of 6 years.
106) 16-12-2004 Ms. Kapur paid Rs.1,450 by cheque towards mobile phone bill
charges for November 2004.
107) 18-12-2004 Ms. Kapur paid Rs.850 in cash towards electricity bill charges for
November 2004.
108) 20-12-2004 Ms. Kapur reimbursed conveyance bills amounting to Rs.1,100 in
cash to Vijay Narayan.
109) 23-12-2004 Ms. Kapur paid Rs.12,000 by cheque to Transform Tech Pvt. Ltd.
110) 24-12-2004 Ms. Kapur raised invoice for Rs.42,500 on InGroove Designers for
consultancy services.
111) 25-12-2004 Ms. Kapur received Rs.15,550 in cash from Trishul Software Solu-
tions.
112) 28-12-2004 Ms. Kapur withdrew Rs.6,000 cash for personal use.
113) 30-12-2004 Ms. Kapur paid Rs.7,500 by cheque towards professional charges for
internal audit of accounts.
JANUARY 2005
114) 3-1-2005 Ms. Kapur paid office rent for December 2004 by cheque.
115) 5-1-2005 Ms. Kapur received Rs.30,000 in cash from InGroove Designers.
116) 6-1-2005 Ms. Kapur paid salaries for December 2004 by cheque.
117) 10-1-2005 Ms. Kapur paid Rs.750 in cash towards office maintenance charges
for December 2004.
118) 12-1-2005 Ms. Kapur received Rs.35,000 by cheque as consulting revenue
from Ala Carte Investments.
119) 15-1-2005 Ms. Kapur withdrew Rs.50,000 capital from the firm by cheque.
120) 18-1-2005 Ms. Kapur paid Rs.2,300 by cheque as mobile phone bill charges for
December 2004.
121) 20-1-2005 Ms. Kapur paid Rs.1,050 in cash towards electricity charges for
December 2004.
122) 23-1-2005 Ms. Kapur reimbursed conveyance bills amounting to Rs.1,800 in
cash to Vijay Narayan.

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Appendix

123) 30-1-2005 Ms. Kapur withdrew Rs.8,000 cash for personal use.
FEBRUARY 2005
124) 5-2-2005 Ms. Kapur paid office rent for January 2005 by cheque.
125) 6-2-2005 Ms. Kapur paid salaries for January 2005 by cheque.
126) 10-2-2005 Ms. Kapur received invoice from Raj Travels for Rs.9,400. This
includes Rs.3,800 towards cab hiring charges and Rs.5,600 towards
outstation tours undertaken by her.
127) 11-2-2005 Ms. Kapur paid Rs.20,000 by cheque to Raj Travels.
128) 12-2-2005 Ms. Kapur paid Rs.750 in cash towards office maintenance charges
for January 2005.
129) 15-2-2005 Ms. Kapur paid Rs.1,600 by cheque towards mobile phone bill
charges for January 2005.
130) 18-2-2005 Ms. Kapur paid Rs.1,200 in cash towards electricity bill for January
2005.
131) 20-2-2005 Ms. Kapur reimbursed conveyance bills amounting to Rs.1,150 in
cash to Vijay Narayan.
132) 24-2-2005 Ms. Kapur purchased stationery consumables worth Rs.7,400 on
credit from Global House.
133) 28-2-2005 Ms. Kapur withdrew Rs.7,000 cash for personal use.
MARCH 2005
134) 3-3-2005 Ms. Kapur paid salaries by cheque for February 2005.
135) 5-3-2005 Ms. Kapur paid office rent for February 2005 by cheque.
136) 8-3-2005 Ms. Kapur paid Rs.750 in cash towards office maintenance charges
for February 2005.
137) 10-3-2005 Ms. Kapur received Rs.30,000 in cash as consulting revenue from
Eye Television Network.
138) 12-3-2005 Ms. Kapur paid Rs.1,450 in cash towards electricity bill for February
2005.
139) 15-3-2005 Ms. Kapur paid Rs.1,900 by cheque towards mobile phone bill
charges for February 2005.
140) 18-3-2005 Ms. Kapur reimbursed conveyance bills amounting to Rs.950 in cash
to Vijay Narayan.
141) 20-3-2005 Invoice received from Global House on 24th of February 2005 had a
totaling error and was overvalued by Rs.600.
142) 21-3-2005 Ms. Kapur paid Rs.6,800 by cheque to Global House.
143) 25-3-2005 Ms. Kapur withdrew Rs.6,500 cash for personal use.

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 Appendix

PROVISION ENTRIES
144) 1-4-2005 Ms. Kapur received Rs.20,000 cash as consulting revenue from
ForeC Marketing Solutions. The services had already been pro-
vided in March 2005.
145) 2-4-2005 Ms. Kapur paid office rent for March 2005 by cheque.
146) 5-4-2005 Ms. Kapur paid salaries by cheque for March 2005.
147) 7-4-2005 Ms. Kapur paid Rs.750 in cash towards office maintenance
charges for March 2005.
148) 12-4-2005 Ms. Kapur paid Rs.1,690 by cheque towards mobile phone bill
charges for March 2005.
149) 15-4-2005 Ms. Kapur reimbursed conveyance bills amounting to Rs.950 in
cash to Vijay Narayan. The bills pertain to March 2005.
150) 18-4-2005 Ms. Kapur received invoice from Raj Travels for Rs.6,600. This
includes Rs.2,900 towards cab hiring charges and Rs.3,700
towards outstation tours undertaken by her. The bill pertains for
February 2005 and March 2005.
151) 20-4-2005 Ms. Kapur paid Rs.870 in cash towards electricity bill for March
2005.

DEPRECIATION ENTRIES
Sl. Asset Date of Value Useful Annual No. of Depreci-
No. name purchase to be life depreci- days ation
depreci- (in ation (a)/ used in for
ated (a) years) (b)=(c) the year
(d) 2004-05
(b) (c)*(d)/
365=(e)
1) Computer 2-4-2004 22,500 4 5,625 364 5,610
2) Cellular 15-4-2004 6,000 5 1,200 351 1,154
Phone
3) Furniture 15-4-2004 20,000 8 2,500 351 2,404
4) Air Condi- 15-4-2004 20,000 6 3,333 351 3,205
tioner
5) Electrical 15-4-2004 15,000 10 1,500 351 1,442
Fittings
6) Office 15-12-2004 12,000 6 2,000 107 586
Equipments
Total 14,401
Disposal value for all assets = 0.
Value to be depreciated (a) is same as the purchase cost.

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Appendix

ADJUSTMENT ENTRIES FOR PREPAID EXPENSES

Nature Payment Period of Sub- Amount Prepaid Prepaid Amount
Date scription/Insur- (b) Period (c) Amount for Cur-
ance (a) (b)/(a)*(c) rent
Year (b)-
=(d)
(d)=(e)

1-7-2004 to 1-4-2005 to 1,500 900

Magazine 6-7-2004 30-6-2006 30-6-2006
subscrip- (24 months) 2,400 (15 months)
tion

Insurance 1-8-2004 1-8-2004 to 6,000 1-4-2005 to 2,000

31-7-2005 31-7-2005 4,000
(12 months) (4 months)

OTHER ADJUSTMENT ENTRIES

SL. NO. NATURE OF ADJUSTMENT
1) Provisions for income tax (2004-05) has to be made at Rs.17,500.
2) Closing stock of stationery consumables on 31st, March 2005 is Rs.5000.
3) Transfer balance of withdrawals account to Nandini Kapur’s Capital account.

CLOSING ENTRY
SL. NO. TRANSACTION
1) Transfer balance of profit and loss account to Nandini Kapur Capital account.
ii Practice Exercise
Nandini Kapur’s transactions for the year 2005 - 2006 are as follows. You are required to:
‡ Record the transactions.
‡ Prepare financial statements.

LIST OF TRANSACTIONS – LEVEL 1 – YEAR 2

SL. NO DATE TRANSACTIONS
APRIL 2005
1) 1-4-2005 Transfer opening balance of stock of stationery consumables (March
31st 2005) account to stationery expenses account.

132 © Tally Solutions Pvt. Ltd., 1988-2005

 Processing Transactions in Tally

Click F1: Detailed or Press ALT+F1 to drill down to the next level of the grouped information.

Trial Balance for April 2004

Figure 5.13 Detailed Trial Balance –1st April’04 to 30th April ‘04

1. You can drill down from a group for further details of that particular group.
‡ Click F4: Group to view the list of groups available in Tally.
‡ Select Fixed Assets and press Enter to view the group summary of fixed assets.

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Processing Transactions in Tally

Figure 5.22 Detailed Trial Balance – 1st April’04 to 31st May’04

5.3.5 Transactions for June 2004

SL NO DATE TRANSACTIONS
JUNE 2004
27) 3-6-2004 Ms. Kapur paid Rs.2,500 in cash towards office rent for May 2004.
i. Make an entry of the transaction in a Payment Voucher.
Debit: Rent Expensesˆ 2,500.
Credit: Cashˆ 2,500.
28) 4-6-2004 Ms. Kapur paid salaries by cheque for May 2004. (refer to transaction
number 5.)

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35) 21-6-2004 Ms. Kapur paid Rs.750 in cash towards office maintenance charges
for May 2004.
i. Make an entry of the transaction in a Payment Voucher.
Debit: Office Maintenance Expensesˆ 750.
Credit: Cashˆ 750.
36) 23-6-2004 Ms. Kapur paid Rs.3,000 in cash as salary advance to Maya Nair.
i. Create ledgerˆ Salary Advance (under Loans & Advances [asset]).
ii. Make an entry of the transaction in a Payment Voucher.
Debit: Salary Advanceˆ 3,000.
Credit: Cashˆ 3,000.
37) 27-6-2004 Ms. Kapur withdrew Rs.6,000 cash for personal use.
i. Make an entry of the transaction in a Payment Voucher.
Debit: Withdrawalsˆ 6,000.
Credit: Cashˆ 6,000.
Trial Balance until June 2004

Figure 5.23 Detailed Trial Balance – 1st April’04 to 30th June’04

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i. Make an entry of the transaction in a Payment Voucher.

Debit: Withdrawalsˆ 6,500.
Credit: Cashˆ 6,500.
Trial Balance until July 2004

Figure 5.24 Detailed Trial Balance – 1st April’04 to 31st July’04

5.3.7 Security Control

Tally allows the user to have a username and password. This security control feature restricts
unauthorised users, from accessing, viewing and altering the data in Tally.
Tally has a highly customisable security system.
1. Go to Gateway of Tally > F3: Cmp Info > Alter > Select Universal Business Solutions.
2. Select Yes in the Use Security Control field.
3. Type Nandini in the Name of Administrator field.
4. Type nandini as Password (Password is case sensitive).

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Trial Balance until August 2004

Figure 5.27 Detailed Trial Balance – 1st April’04 to 31st August’04

5.3.9 Transactions for September 2004

SL.NO DATE TRANSACTIONS

SEPTEMBER 2004
61) 2-9-2004 Ms. Kapur paid Rs.3,800 in cash for repairs and maintenance of office
premises.

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68) 20-9-2004 Ms. Kapur reimbursed conveyance bills amounting to Rs.500 in cash
to Vijay Narayan.
Make an entry of the transaction in a Payment Voucher.
Debit: Conveyance Expensesˆ 500.
Credit: Cashˆ 500.
69) 23-9-2004 Ms. Kapur paid Rs.10,000 by cheque to Raj Travels.
Make an entry of the transaction in a Payment Voucher.
Debit: Raj Travels ˆ 10,000.
Credit: HDFC Bankˆ 10,000.
70) 24-9-2004 Ms. Kapur paid Rs.1,750 by cheque towards mobile phone bill charges
for August 2004.
Make an entry of the transaction in a Payment Voucher.
Debit: Telephone Expenses ˆ 1,750.
Credit: HDFC Bank ˆ 1,750.
71) 28-9-2004 Ms. Kapur withdrew Rs.5,500 cash for personal use.
Make an entry of the transaction in a Payment Voucher.
Debit: Withdrawalsˆ 5,500.
Credit: Cash ˆ 5,500.
Trial Balance until September 2004

Figure 5.28 Detailed Trial Balance – 1st April’04 to 30th September’04

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Trial Balance until October 2004

Figure 5.29 Detailed Trial Balance – 1st April’04 to 31st October’04

5.3.11 Transactions for November 2004

SL NO DATE TRANSACTIONS
NOVEMBER 2004
85) 1-11-2004 Ms. Kapur withdrew Rs.8,000 cash for personal use.
i. Make an entry of the transaction in a Payment Voucher.
Debit: Withdrawalsˆ 8,000.
Credit: Cash ˆ 8,000.
86) 2-11-2004 Ms. Kapur received an invoice for Rs.7,200 from Raj Travels. This
includes Rs.2,800 towards cab hiring charges and Rs.4,400 towards
outstation tours undertaken by her.

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Trial Balance until November 2004

Figure 5.30 Detailed Trial Balance –1st April’04 to 30th November’04

5.3.12 Transactions for December 2004

SL NO DATE TRANSACTIONS
DECEMBER 2004
98) 3-12-2004 The statement received from HDFC bank shows that the bank has
charged Rs.550 as cheque bouncing charges and Rs.330 as cheque
book charges. Cheque bouncing charges are to be recovered from
Trishul Software Solutions (refer transaction number 92).

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Trial Balance until December 2004

Figure 5.34 Detailed Trial Balance –1st April’04 to 31st December’04

5.3.13 Transactions for January 2005

SL NO DATE TRANSACTIONS
JANUARY 2005
114) 3-1-2005 Ms. Kapur paid office rent for December 2004 by cheque. (Refer trans-
action number 4.)
i. Make an entry of the transaction in a Payment Voucher.
Debit: Rent Expensesˆ 2,500.
Credit: HDFC Bankˆ 2,500.
115) 5-1-2005 Ms. Kapur received Rs.30,000 in cash from InGroove Designers.

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123) 30-1-2005 Ms. Kapur withdrew Rs.8,000 cash for personal use.
i. Make an entry of the transaction in a Payment Voucher.
Debit: Withdrawalsˆ 8,000.
Credit: Cashˆ 8,000.
Trial Balance until January 2005

Figure 5.35 Detailed Ttrial Balance – 1st April’04 to 31st January’05

5.3.14 Transactions for February 2005

SL NO DATE TRANSACTIONS
FEBRUARY 2005
124) 5-2-2005 Ms. Kapur paid office rent for January 2005 by cheque (refer trans-
action number 4).

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i. Make an entry of the transaction in a Payment Voucher.

Debit: Conveyance Expensesˆ 1,150.
Credit: Cashˆ 1,150.
132) 24-2-2005 Ms. Kapur purchased stationery consumables worth Rs.7,400 on
credit from Global House.
i. Make an entry of the transaction in a Journal Voucher.
Debit: Stationery Expensesˆ 7,400.
Credit: Global Houseˆ 7,400.
133) 28-2-2005 Ms. Kapur withdrew Rs.7,000 cash for personal use.
i. Make an entry of the transaction in a Payment Voucher.
Debit: Withdrawalsˆ 7,000.
Credit: Cash ˆ 7,000.
Trial Balance until February 2005

Figure 5.36 Detailed Trial Balance – 1st April’04 to 28th February’05

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passing each entry. The profit and loss account gives the financial health of an organisation at the
end of the year.
When the balances of the company are carried forward, Tally carries forward the balances of asset
and liability accounts only. The balances of income and expenditure account will not be carried
forward.

Trial Balance until March 2005

Figure 5.38 Detailed Trial Balance – 1st April’04 to 31st March’05

5.4 Points to Remember

‡ All voucher entries are made using ledger account heads.
‡ A group is a collection of ledgers that contain transactions that are similar in nature.
‡ Tally provides a set of 28 pre-defined groups of which 15 are categorised as primary and the
rest are sub-groups.
‡ In Tally, transactions from cash to bank, bank to cash and one bank to another are recorded
using a contra voucher.

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