Question

Following is the extract from the Balance Sheet of Kinder Joy Ltd.:

Particular	31st March 2026 (₹)	31st March 2025 (₹)
Equity Share Capital	8,00,000	8,00,000
10% Preference Share Capital	6,00,000	6,00,000
Surplus, i.e., Balance in Statement of Profit and Loss	7,20,000	4,00,000
Unpaid Dividend	20,000	−

Additional Information:

1. Proposed dividends on equity shares for the years 2024-25 and 2025-26 are ₹ 1,60,000 and ₹ 2,00,000, respectively.
2. An Interim Dividend of ₹ 40,000 on Equity Shares was paid.

Calculate Net Profit before Tax and Extraordinary Items.

Hint: Dividend on preference shares is paid if dividend is paid on equity shares. Since dividend is paid (Proposed for 2024–25) on Equity Shares, dividend on Preference Shares must have been paid. Therefore, Preference Dividend of ₹ 60,000, i.e., 10% of ₹ 6,00,000 will also be added to determine net profit before Tax and Extraordinary Items.

Answer 1

Particulars	Amount (₹)
Profit as per Statement of Profit and Loss (7,20,000 – 4,00,000)	3,20,000
Add: Proposed Dividend (Current Year)	1,60,000
Add: Proposed Preference Dividend (Current Year) 10% of 6,00,000	60,000
Add: Interim Dividend	40,000
Profit Before Taxation and Extraordinary Items	5,80,000