Page 277 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes Stock on hand on 30 June, 2011, were 90,000. Sushil & Co. paid 50,000 for additional shares
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and out of this account, the company incurred preliminary expenses of 30,000 and purchased a
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typewriter for 15,000. Debtors and Creditors prior to 1 June, 2011, were to be taken over by
Sushil & Co.
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Prepare the Profit and Loss Account of Sushil Company Limited for the period ended 30 June,
2011 and a Balance Sheet as on that date. All workings are to form part of your answer.
Solution:
Sushil Company Limited
Profit and Loss Account
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from 1 April, 2011 to 30 June, 2011
Particulars Particulars
To Opening Stock 1,25,000 By Sales 5,00,000
To Purchases 1,80,000 By Closing Stock 90,000
To Salaries & Wages 55,000
To Rent 7,500
To Expenses 25,000
To Profit 1,97,500
5,90,000 5,90,000

Alternatively, the first trading account can be made to find out gross profit and then gross profit
and all above expenses can be separated in pre-incorporation and post-incorporation periods
into time ratio i.e., 2:1. The result will be the same.

Pre- Post- Pre- Post-
Particulars Particulars
incorporation incorporation incorporation incorporation
To Director’s fees — 5,000 By Profit
To Capital Reserve — 60,833 (2:1) 1,31,667 65,833
To Net Profit 1,31,667 —
1,31,667 65,833 1,31,667 65,833
Balance Sheet of Sushil Co. Limited as on 30 June, 2011
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Liabilities Assets
Share Capital: Fixed Assets:
Issued & Paid up. Goodwill ( 1,50,000 – 60,833) 89,167
55,000 Equity shares of 10 each 5,50,000 Buildings 1,50,000
fully paid up
Reserve & Surplus: Plant and Machinery 1,25,000
Profit and Loss A/c 1,31,667 Type-writer 15,000
Current Liabilities: Current Assets, Loans &
Advances:
Sundry Creditors 25,000 Sundry Debtors 40,000
Stock (closing) 90,000
Due from vendor 1,62,500
Bank 5,000
Miscellaneous Expenditure:
Preliminary Expenditure 30,000
7,06,667 7,06,667

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