Page 273 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Post-
Pre-
Post-
Particulars
Particulars
ration
incorporation
incorporation
ration
period
period
period
period
12,000
50,000
1,50,000
36,000
By Gross
To Salaries (1:3)
Profit b/d Pre-incorpo- incorpo-
(1:3)
To Miscellaneous
Exps. (1:3) 5,500 16,500 By Rent 3,250 9,750
Received
Accounting for Companies-I (1:3)
To Rates & Taxes (1:3) 1,750 5,250
To Repairs to 750 2,250
Buildings
Notes To Preliminary Exps. — 8,000
To Bad Debts 500 500
To Provision for
Doubtful
Debts — 5,000
To Directors’ fees — 2,400
To Interest to Vendors 8,750 8,750
To Depreciation:
Building 6,500 1,500
Furniture 7,000 15,000
Vehicles 3,750 11,250
To Capital Reserve 20,250
To Net Profit 63,850
53,250 1,59,750 53,250 1,59,750

Balance Sheet of Ashoka Limited as on 31 December, 2010
st
Liabilities Assets
Share Capital: Fixed Assets:
Authorized, Subscribed Called up and Paid 4,50,000 Goodwill 3,100
up 4,500 shares of 100 each fully paid
(issued to vendor for Purchase
Consideration of business)
Freehold land 50,000
Reserve & Surplus: Building 1,30,000
Capital Reserve (Pre-incorporation profit) 20,250 -Depreciation 6,500 1,23,500
Profit and Loss A/c. (Post-acquisition profit) 63,850 Furniture & Fixture 15,000
Secured Loans Nil Less Dep. 1,500 13,500
Unsecured Loans: Transport vehicles 35,000
Bank overdraft 1,65,000 – Dep. 7,000 28,000
Fixed Deposit 35,000 Investments Nil
Current Liabilities: Current Assets:
Sundry Creditors 65,000 Stock 4,80,000
Debtors 94,000
-D/D Provision 5,000 89,000
Cash in hand 12,000
Miscellaneous Exps. Nil
7,99,100 7,99,100

Working Note:
1. Time Ratio 3:9 or 1:3
2. Turnover Ratio will also be the same because sales are spread evenly over the year i.e., 1:3.

Self Assessment

State whether the following statements are true or false:
8. Loss prior to incorporation must be transferred to goodwill account.
9. Profit prior to incorporation must be available for dividend.

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