Question

New Ltd. Took over the running business on
1st Jan 2018. The Company was incorporated
on 1st May 2018. Accounts are closed on 31st
dec 2018. Sales upto 30th April 2018 were Rs.
3,00,000 out of total Sales of Rs. 15,00,000 of
the Year. Calculate Sales Ratio.​

Answer 1

Answer:

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Answer 2

Sales Ratio = 17:55

Generally, companies take over the business but get incorporated on later dates, which causes the difference in accounting because the business before the incorporation is not considered as a company. To solve this situation we divide all the cost and revenue from the date of takeover till the accounts get closed based on a few ratios such as time ratio, sales ratio, etc. to distinguish the activities and operation of a business in between date of takeover to date of incorporation and the date of incorporation and year-end.

Sales Ratio = 1/Jan/2018 to 1/May/2018 : 1/May/2018 to 31/Dec/2018

                    = 1500000/12 = 125000 (1500000-125000 = ₹1375000

                   = 300000+ 125000 = ₹425000

                    = 425000 : 1375000

                    = 17:55