Page 311 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes (i) loss on sale of fixed assets 30,000
(j) profit on sale of investment 90,000
16. Calculate the managerial remuneration from the following particulars of Radha Krishna
& Company Ltd. due to the managing directors of the company at the rate of 5% of the
profits. Also determine the excess remuneration paid, if any:

Net profits 7,00,000
Net profit is determined after considering the following:
(i) depreciation 1,20,000
(ii) preliminary exps. 35,000

(iii) tax provision 10,85,000
(iv) director’s fees 28,000
(v) bonus 52,500
(vi) profit on sale of fixed assets

(original cost: 70,000, written down value: 38,500) 54,250
(vii) provision for doubtful debts 31,500
(viii) scientific research expenditure (for setting up new machinery) 70,000
(ix) managing director’s remuneration paid 1,05,000

Other Information :
(i) depreciation allowable under schedule XIV of the companies act, 1956 1,22,500
(ii) bonus liability as per Payment of Bonus Act, 1965. 63,000
17. Following is the profit and loss a/c of Lakshmikant & Company Limited for the year
ending 31st march, 2005:

Particulars Particulars
To salaries 63,875 By gross profit 8,75,000
To income-tax 67,375
To depreciation (including 8,750 96,250 By subsidy received form 2,10,000
terminal depreciation) government
To compensation for breach of contract. 14,000 By profit on sale of machinery
To provision for b/d. 3,500 Cost 3,85,000
To general reserve 10,500 Depreciation value 1,22,500
To general expenses 7,000 Sale price 4,37,500 3,15,000
To proposed dividend 43,750
To director’s fees 26,250
To loss on sale of investment 17,500
To net profit 10,50,000
14,00,000 14,00,000

Find out the permissible maximum commission payable for directors from the above
information when:

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