Podcast
Questions and Answers
What was the total profit prior to incorporation for Mehta Ltd.?
What was the total profit prior to incorporation for Mehta Ltd.?
What was the time ratio of pre-incorporation to post-incorporation profits for Mehta Ltd.?
What was the time ratio of pre-incorporation to post-incorporation profits for Mehta Ltd.?
Which expense type is excluded from the pre-incorporation profit calculation for Mehta Ltd.?
Which expense type is excluded from the pre-incorporation profit calculation for Mehta Ltd.?
What amount of dividend can Colaba Ltd. declare based on its profits?
What amount of dividend can Colaba Ltd. declare based on its profits?
Signup and view all the answers
Which of the following is included in the total expenses for Colaba Ltd.?
Which of the following is included in the total expenses for Colaba Ltd.?
Signup and view all the answers
How much was the total sales for the remaining period for Mehta Ltd. after the first four months?
How much was the total sales for the remaining period for Mehta Ltd. after the first four months?
Signup and view all the answers
What is the gross profit amount reported for Colaba Ltd. for the year 2020?
What is the gross profit amount reported for Colaba Ltd. for the year 2020?
Signup and view all the answers
What was the commission on sales percentage used for calculating Mehta Ltd.'s sales?
What was the commission on sales percentage used for calculating Mehta Ltd.'s sales?
Signup and view all the answers
Study Notes
Mehta Ltd Incorporation Analysis
- Mehta Ltd incorporated on 1st May 2020, taking over Shah Bros. effective from 1st January 2020.
- Certificate of Commencement of Business received on 1st June 2020.
- First final accounts prepared for the period ending 31st October 2020.
Financial Overview
- Expenses listed include:
- Salaries: Rs. 15,500
- Advertisement expenses: Rs. 2,400
- General expenses: Rs. 3,000
- Preliminary expenses: Rs. 2,750
- Depreciation: Rs. 3,500
- Interest paid to vendors: Rs. 1,800
- Debenture interest: Rs. 2,340
- Rent received: Rs. 4,500
- Commission on sales at 1%: Rs. 3,000
- Sales for first four months: Rs. 75,000
Profit Calculation
- Profit prior to incorporation: Rs. 18,850
- Profit after incorporation: Rs. 67,020
- Time ratio for pre and post-incorporation: 2:3
- Sales ratio for pre and post-incorporation: 1:3
- Total sales calculated: Rs. 300,000
- Remaining sales after first four months: Rs. 225,000
Colaba Ltd Profit Analysis
- Date of business purchase: 1st January 2020.
- Certificate of Incorporation received on 1st May 2020.
- Gross Profit for 2020: Rs. 17,290.
Expense Breakdown for Colaba Ltd
- Key expenses:
- Salaries: Rs. 12,000 (includes Directors' fees of Rs. 3,000)
- Preliminary expenses written off: Rs. 270
- Bad debts: Rs. 140
- Miscellaneous expenses: Rs. 150
Income Overview
- Income generated:
- Rent received: Rs. 120
- Interest received: Rs. 60
Sales Information
- Sales for individual months:
- January, May, August: 1.5 times the average monthly sales.
- September: Twice the average monthly sales.
Dividend Potential
- Calculation of pre and post-incorporation profits will dictate the percentage dividend able to be declared to shareholders.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Explore the financial intricacies of Mehta Ltd's incorporation through this detailed quiz. Analyze the expenses, profit calculations, and sales ratios before and after the incorporation. Test your understanding of incorporation accounting and financial management.
