Model: Computation of pre- and post-incorporation profit through columnar P&L A/c Mr. Raj formed a private limited company under the name and style of Raj Pvt. Ltd. to take over his existing business as from 1 April 2009, but the company was not incorporated until 1 July 2009. No entries relating to transfer of the business are entered in the books. This was carried on without a break until 31 March 2010. The following balances were extracted from the books on 31 March 2010:
|
Particulars |
|
|
|
Opening Stock |
25,000 |
— |
|
Purchases |
1,75,000 |
— |
|
Carriage Outwards |
4,000 |
— |
|
Travelling Commission |
7,000 |
— |
|
Office Salaries |
30,000 |
— |
|
Administrative Expenses |
25,000 |
— |
|
Rent and Rates |
15,000 |
— |
|
Director’s Fees |
25,000 |
— |
|
Fixed Assets |
1,50,000 |
— |
|
Current Assets Excluding Stock |
40,000 |
— |
|
Preliminary Expenses |
6,000 |
— |
|
Sales |
— |
3,00,000 |
|
Mr. Raj’s Capital A/c on 1 April 2009 |
— |
2,70,000 |
|
Current Liabilities |
— |
40,000 |
You are also given that:
- Stock on 31 March 2010 was Rs.20,000.
- The gross profit ratio is constant and monthly sales in April 2009, February 2010 and March 2010 are double the average monthly sales for the remaining months of the year.
- The purchase consideration was agreed to be satisfied by the issue of 50,000 equity shares of Rs.10 each.
- The preliminary expenses are to be written off.
- You are to assume that carriage outwards and traveller’s commission vary in direct proportion to sales.
You are required to prepare P&L A/c for the year ended 31 March 2010 apportioning the profit or loss of the periods before and after incorporation. Depreciation is to be provided @ 20% p.a. on fixed assets.