Calculate profit prior to incorporation

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Reference no: EM131698630

CORPORATE ACCOUNTS QUESTIONS -

Q1. Distinguish between internal reconstruction and external reconstruction.

Q2. X Ltd invited applications for 10,000 shares of Rs. 100 each at a discount of 6% payable as follows:

	Rs.
On application	25
On allotment	34
On First and final call	35

The applications received were for 9,000 shares and all of these were accepted. All moneys due were received except the first and final call on 100 shares which were forfeited. Out of which 50 shares were reissued @ Rs. 90 as fully paid. Give journal entries in the books of the company.

Q3. Raghu Private Ltd was registered on 1^st July 2005 to take over the running business of Mr. Chandran with effect from 1^st April 2005. The following profit and loss account for the year ended 31^st March 2006 was drawn up.

	Rs.		Rs.
To Commission	2,625	By Gross Profit	98,000
To Advertisement	5,250	By Bad Debts recovered	500
To Managing Directors remuneration	9,000
To Depreciation	2,800
To Salaries	18,000
To Insurance	600
To Preliminary Expenses	700
To Rent and Taxes	3,000
To Discount	350
To Bad Debt	1,250
To net Profit	54,925
	98,500		98,500

Additional information:

(a) The average monthly turnover from July 2005 onwards was double than that of the previous months.

(b) Rent for the first three months was paid @ Rs. 200 per month and thereafter at a rate increased by Rs. 50 per months.

(c) Bad debts Rs. 350 related to sales effected after 1^st September 2005 and the recovery of bad debts was in respect of debts written off during 2003.

(d) Advertisement expenses were directly proportionate to sales.

Required - Calculate profit prior to incorporation.

Q4. The paid up capital of Velan Ltd amounted to Rs. 2,50,000 consisting of 25,000 equity shares of Rs. 10 each. Due to losses incurred by the company continuously, the Directors of the company prepared a scheme of reconstruction which was duly approved by the court. The clauses of reconstruction were as follows:

(a) In lieu of their present holdings, the shareholders are to receive

(i) Fully paid new equity equal to 2/5 of their present holding

(ii) 5% preference shares fully paid to the extent of 20% of the above new equity share and

(iii) 3000 6% debentures of Rs. 10 each.

(b) An issue of 3,000, 5% debentures of Rs. 10 each was made and fully subscribed in cash.

(i) Goodwill from Rs. 1,50,000 to Rs. 75,000

(ii) Machinery from Rs. 50,000 to Rs. 37,500

(iii) Buildings from Rs. 75,000 to Rs. 62,500.

Required - Give journal entries to give effect to the above scheme of internal reconstruction.

Q5. SS Ltd went into liquidation. Its balance sheet as on 1^st April 2006 was as follows:

Liabilities	Rs.	Assets	Rs.
5,000 ordinary shares of Rs. 100 each Rs. 800 paid	4,00,000	Land and Buildings	80,000
Secured loan and land and buildings	1,00,000	Machinery	2,60,000
Unsecured creditors	1,90,000	Stock	1,05,000
Preferential creditors	10,000	Loans	40,000
		Cash	5,000
		Profit and Loss a/c	1,10,000
	7,00,000		7,00,000

Assets realized as follows:

	Rs.
Land and Buildings	1,20,00
Machinery	40,000
Stock	10,000
Debtors	20,000

Loans are wholly bad. Liquidator remuneration Rs. 1,000 plus 2% on the amount paid to unsecured creditors. Liquidation expenses Rs. 1,000. Prepare liquidator Final statement of Account.

Reference no: EM131698630

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