Lalli Ltd. was incorporated on 1 July 2010 which took over a running concern with effect from 1 January 2010. The sales for the period up to 1 July 2010 was Rs.10,80,000 and the sales from 1 July 2010 to 31 December 2010 amounted to Rs.13,20,000. The expenses debited to profit and loss account included:
|
(i) Director’s fees |
60,000 |
|
(ii) Bad debts |
7,200 |
|
(iii) Advertisement (Rs.2,000 per month) |
24,000 |
|
(iv) Salaries and general expenses |
1,28,000 |
|
(v) Preliminary expenses written off |
12,000 |
|
The gross profit for the period from 1 January 2010 to 31 December 2010 |
9,60,000 |
You are required to compute profit prior to incorporation.