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A company purchase a business on 1st April, 2013 but it was incorporated on 1st July, 2013. Net profit for the year ending 31st March, 2014 was 12000. Sales up to 30th June was rupees 40000 and sales for remaining 9 months was rupees 1,60,000. How you will make the account of profit for the year in the books of company.?
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A company purchase a business on 1st April, 2013 but it was incorporat...
Accounting for the Purchase of a Business


Step 1: Calculate the Profit for the Year


  • Net profit for the year ending 31st March, 2014 was Rs. 12000.



Step 2: Allocate the Sales


  • Sales up to 30th June was Rs. 40000.

  • Sales for the remaining 9 months was Rs. 1,60,000.

  • Total sales for the year is Rs. 2,00,000.

  • Allocate the sales between the old business and the new business based on the purchase date.

  • The old business had sales of Rs. 40000 and the new business had sales of Rs. 1,60,000.



Step 3: Calculate the Profit for the Old Business


  • The old business had sales of Rs. 40000 and a profit of Rs. 12000.

  • The profit margin for the old business is 30% (12000/40000).

  • The profit for the old business is Rs. 12000 (30% of Rs. 40000).



Step 4: Calculate the Profit for the New Business


  • The new business had sales of Rs. 1,60,000.

  • The cost of goods sold for the new business is 70% (based on industry standards).

  • The cost of goods sold for the new business is Rs. 1,12,000 (70% of Rs. 1,60,000).

  • The gross profit for the new business is Rs. 48,000 (Rs. 1,60,000 - Rs. 1,12,000).

  • The net profit for the new business is Rs. 33,600 (70% of Rs. 48,000).



Step 5: Combine the Profit for Both Businesses


  • The profit for the old business is Rs. 12000.

  • The profit for the new business is Rs. 33,600.

  • The total profit for the year is Rs. 45,600 (Rs. 12000 + Rs. 33,600).



Step 6: Record the Profit in the Books of the Company


  • Debit the Profit and Loss Account with Rs. 45,600.

  • Credit the old business with Rs. 12,000.

  • Credit the new business with Rs. 33,600.

Community Answer
A company purchase a business on 1st April, 2013 but it was incorporat...
Balance sheet 9600, profit incorporate 2400
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A company purchase a business on 1st April, 2013 but it was incorporated on 1st July, 2013. Net profit for the year ending 31st March, 2014 was 12000. Sales up to 30th June was rupees 40000 and sales for remaining 9 months was rupees 1,60,000. How you will make the account of profit for the year in the books of company.?
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A company purchase a business on 1st April, 2013 but it was incorporated on 1st July, 2013. Net profit for the year ending 31st March, 2014 was 12000. Sales up to 30th June was rupees 40000 and sales for remaining 9 months was rupees 1,60,000. How you will make the account of profit for the year in the books of company.? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about A company purchase a business on 1st April, 2013 but it was incorporated on 1st July, 2013. Net profit for the year ending 31st March, 2014 was 12000. Sales up to 30th June was rupees 40000 and sales for remaining 9 months was rupees 1,60,000. How you will make the account of profit for the year in the books of company.? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A company purchase a business on 1st April, 2013 but it was incorporated on 1st July, 2013. Net profit for the year ending 31st March, 2014 was 12000. Sales up to 30th June was rupees 40000 and sales for remaining 9 months was rupees 1,60,000. How you will make the account of profit for the year in the books of company.?.
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