Smart Ltd. was incorporated on 1st August, 2010 with an authorised capital of 5,00,000 equity shares of Rs.10 each to acquire the business of Mr. Smart with effect from 1st April, 2010.
The purchase consideration was agreed at Rs.7,00,000 to be satisfied by the issue of 40,000 equity shares of Rs.10 each as fully paid up and 3,000, 9% debentures of Rs.100 each as fully paid up.
The entries relating to the transfer were not made in the books which were carried on without a break until 31st March, 2011. On 31st March, 2011 the trial balance extracted from the books showed the following:
|
Rs |
Rs |
|
|
Sales |
|
10, 43,700 |
|
Purchases |
7,76,580 |
|
|
Advertising |
37,800 |
|
|
Postage and Telegram |
8,820 |
|
|
Rent and Rates |
18,420 |
|
|
Packing Expenses |
16,800 |
|
|
Office Expenses |
12,540 |
|
|
Opening Stock as on 1.4.2010 |
1,05,220 |
|
|
Directors‘ fees |
20,000 |
|
|
Debenture Interest |
18,000 |
|
|
Land and Buildings |
3,00,000 |
|
|
Plant and Machinery |
1,80,000 |
|
|
Furniture and Fixture |
20,000 |
|
|
Sundry Debtors |
1,39,500 |
|
|
Cash at Bank |
40,000 |
|
|
Cash in hand |
4,900 |
|
|
Bills Payable |
|
30,000 |
|
Sundry Creditors |
|
53,240 |
|
Preliminary Expenses |
7,360 |
|
|
Smart‘s Capital Account |
|
5, 89,000 |
|
Smart‘s Drawings Account |
10,000 |
|
|
|
17,15,940 |
17,15,940 |
You are also given the following additional information:
(i) Stock on 31st March, 2011 amounted to Rs.98,920.
(ii) The average monthly sales for April, May and June were one half of those for the remaining months of the year and the gross profit margin was constant throughout the year.
You are required to prepare the Trading and Profit and Loss Account for the year ended 31st March, 2011 and the Balance Sheet of Smart Ltd. as on that date.