Page 275 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes Interest to Vendor 12,500 8,50,000
Gross Profit 13,50,000
3. Time Ratio:
st
Pre-incorporation Period (1 Jan., 2010 to 30 April 2010) = 4 months
th
st
Post-incorporation Period (1 May to 31 December 2010) = 8 months
st
Time Ratio 4:8 or 1:2.
4. Sales Ratio: Assume monthly sales in first half is Re 1 hence sales in the second half will be
2. Sales will be
Jan. Feb. March April May June July Aug. Sep. Oct. Nov. Dec.
1 1 1 1 1 1 2 2 2 2 2 2
Sales in pre-incorporation period 4

sales in post-incorporation period 14.
Sales Ratio 4:14 or 2:7
Statement for pre-incorporation profit and post-incorporation profit.

Particulars Pre-incorporation Post-incorporation
Gross Profit (2:7) 3,00,000 10,50,000
Less: Expenses–
Depreciation 1:2 90,000 1,80,000
Audit fees — 37,500
Director’s fees –– 1,25,000
Preliminary Exps. 30,000
Office Exps. (1:2) 65,000 1,30,000
Selling Exps. (2:7) 40,000 1,40,000
Interest to vendors (4:1) 10,000 2,500
2,05,000 6,45,000
Net Profit 95,000 4,05,000
Balance Sheet as on 31 December, 2010
st

Liabilities Assets
Share Capital Subscribed & Paid 40,00,000 Fixed Assets:
up Capital
Reserve & Surplus: Goodwill
( 5,00,000 – 95,000) 4,05,000
Profit and Loss A/c. 4,05,000 Machinery 27,50,000
– Deb. 2,70,000 24,80,000
Patents 2,00,000
Current Assets:
Stock 3,50,000
Cash 9,70,000
44,05,000 44,05,000

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