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calculation of managerial remuneration on net profits after charging such remunerat 674598

1. (Calculation of managerial remuneration on net profits after charging such remuneration) Taking Illustration No. 6 above, suppose the manager is entitled to receive a commission of 1% of the net profits of the company after charging his salary and commission. Calculate the maximum remuneration payable to the manager.

2. Due to inadequacy of profit during the year, the company proposes to declare dividend out of the general reserves. From the following particulars, you are to ascertain the amount that can be drawn applying the Companies (Declaration of Dividend out of Reserves) Rules, 1975:

 

Rs

 (a) 17,500 9% preference shares of 100 each fully paid  

 17,50,000  

 (b) 7,00,000 equity shares of 10 each fully paid  

 70,00,000  

 (c) General reserves  

 21,00,000  

 (d) Capital reserves on revaluation of assets  

 3,50,000  

 (e) Share premium  

 3,50,000  

 (f) Profit and loss account credit balance  

 63,000  

 (g) Net profit for the year  

 3,57,000  

Average rate of dividend during the last five years: 15%.

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