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

Sum

Prepare Comparative Income Statement from the following information:

 Particulars 2015-16Rs. 2016-17Rs. Manufacturing expenses 35,000 80,000 Opening stock 30,000 60% of closing stock Sales 9,60,000 4,50,000 Returns outward 4,000 (out of credit purchase) 6,000 (out of cash purchase) Closing stock 150% of opening stock 1,00,000 Credit purchases 1,50,000 150% of cash purchase Cash purchases 80% of credit purchases 40,000 Carriage outward 10,000 30,000 Building 1,00,000 2,00,000 Depreciation on building 20% 10% Interest on bank overdraft 5,000 - 10% debentures 2,00,000 20,00,000* Profit on sale of copyright 10,000 20,000 Loss on sale of personal car 10,000 20,000 Other operating expenses 20,000 10,000 Tax rate 50% 40%

*There is a misprint in the book, this should be 2,00,000

#### Solution

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

 Particulars Note  No. 2015-16 (Rs) 2016-17 (Rs) Absolute  Change(Rs) Percentage Change 1. Revenue from Operations 9,60,000 4,50,000 (5,10,000) (53.13) 2. Other Income 10,000 20,000 10,000 100 3. Total Revenue (1 + 2) 9,70,000 4,70,000 (5,00,000) (51.55) 4. Expenses a. Purchases of Stock-in-Trade 2,66,000 94,000 (1,72,000) (64.7) b. Change in Inventories (15,000) (40,000) (55,000) (366.7) c. Finance Costs 25,000 20,000 (5,000) (20) d. Depreciation and Amortisation Expenses 20,000 20,000 - - e. Other Expenses 30,000 40,000 10,000 33.33 Total Expenses 3,26,000 1,34,000 (1,92,000) 58.90 5. Profit before Tax (3 – 4) 6,44,000 3,36,000 (3,08,000) 47.83 Less: Income Tax 3,22,000 1,34,400 (1,87,600) 58.26 6. Profit After Tax 3,22,000 2,01,600 1,20,400 37.39

Working Notes:

1. Calculation of Net Purchases and Change in Inventory

Net Purchases of stock in Trade = Cash Purchases + Credit Purchases - Purchases Returns

2013 = 120000 + 150000 - 4000 = Rs 266000

2014 = 40000 + 60000 - 6000 = Rs 94000

Change in Inventory = Opening Stock - Closing Stock

2013 = 30000 - 45000 = Rs (15000)

2014 = 60000 - 100000 = Rs (40000)

2. Calculation of Finance Cost

Finance Cost = Interest on Bank Overdraft + Interest on Debentures

Finance Cost (2016) = 5,000 + 20,000 = Rs 25,000

Finance Cost (2017) = 0 + 20,000 = Rs 20,000

3. Calculation of Other Expenses

Other Expenses = Carriage outward + Other operating expenses

Other Expenses (2016) = 10,000 + 20,000 = Rs 30,000

Other Expenses (2017) = 30,000 + 10,000 = Rs 40,000

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 4 | Page 186