# Prepare Comparative Income Statement from the Following Information: - Accountancy

Sum

Prepare Comparative Income Statement from the following information:

 Particulars 2016-17Rs. 2015-16Rs. Freight Outward 20,000 10,000 Wages (office) 10,000 5,000 Manufacturing Expenses 50,000 20,000 Stock adjustment (60,000) 30,000 Cash purchases 80,000 60,000 Credit purchases 60,000 20,000 Returns inward 8,000 4,000 Gross profit (30,000) 90,000 Carriage outward 20,000 10,000 Machinery 3,00,000 2,00,000 Charge 10% depreciation on machinery 10,000 5,000 Interest on short-term loans 20,000 20,000 10% debentures 20,000 10,000 Profit on sale of furniture 20,000 10,000 Loss on sale of office car 90,000 60,000 Tax rate 40% 50%

#### Solution

Comparative Income Statement
for the year ended March 31, 2016 and 2017

 Particulars Note No. 2015-16 (Rs) 2016-17 (Rs) Absolute  Change(Rs) Percentage Change 1. Revenue from Operations 2,16,000 92,000 (1,24,000) (57.4) 2. Other Income 10,000 20,000 10,000 100 3. Total Revenue (1 + 2) 2,26,000 1,12,000 (1,14,000) (50.44) 4. Expenses a. Purchases of Stock-in-Trade 80,000 1,40,000 60,000 75 b. Change in Inventories 30,000 (60,000) (90,000) (300) c. Employee Benefit Expenses 5,000 10,000 5,000 100 d. Finance Costs 21,000 22,000 1,000 4.54 e. Depreciation and Amortisation Expenses 5,000 10,000 5,000 100 f. Other Expenses 80,000 1,30,000 50,000 62.5 Total Expenses 2,21,000 2,52,000 31,000 14.03 5. Profit before Tax (3 – 4) 5,000 (1,40,000) (83,000) 16.6 Less: Income Tax 2,500 - (2,500) (100) 6. Profit After Tax 2,500 (1,40,000) (1,37,500) 55

Working Notes:

1. Calculation of Net Sales

Net Sales = Cost of Goods Sold + Gross Profit - Sales Return

or, Net Sales = Purchases + Manufacturing Expenses + Change in Inventory + Gross Profit - Sales Return

Net Sales (2016) = 80,000 + 20,000 +30,000 + 90,000 - 4,000 = Rs 2,16,000

Net Sales (2017) = 1,40,000 + 50,000 - 60,000 - 30,000 - 80,000 = Rs 92,000

2. Calculation of Finance Cost

Finance Cost = Interest on short-term loans + Interest on 10% Debentures

Finance Cost (2016) = 20,000 + 1,000 = Rs 21,000

Finance Cost (2017) = 20,000 + 2,000 = Rs 22,000

3. Calculation of Other Expenses

Other Expenses = Freight Outward + Carriage Outward + Loss on sale of office car

Other Expenses (2016) = 10,000 + 10,000 + 60,000 = Rs 80,000

Other Expenses (2017) = 20,000 + 20,000 + 90,000 = Rs 1,30,000

Concept: Comparative Statements
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#### APPEARS IN

NCERT Class 12 Accountancy - Company Accounts and Analysis of Financial Statements
Chapter 4 Analysis of Financial Statements
Numerical Questions | Q 3 | Page 185