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Question
Prepare Comparative Income Statement from the following information:
| Particulars | 2015-16 Rs. |
2016-17 Rs. |
| 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% |
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Solution
| Comparative Income Statement for the years ended March 31, 2016 and 2017 |
||||
|
Particulars |
2015-16 |
2016-17 |
Absolute |
Percentage |
|
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) |
(64.66) |
|
b. Change in Inventories |
(15,000) |
(40,000) |
(25,000) |
(166.67) |
|
c. Finance Costs |
25,000 |
20,00,000 |
1,75,000 |
700 |
|
d. Depreciation and |
20,000 |
20,000 |
- | - |
|
e. Other Expenses |
65,000 | 1,20,000 | 55,000 | 84.62 |
|
Total Expenses |
3,61,000 |
3,94,000 |
33,000 |
9.14 |
|
5. Profit before Tax (3 – 4) |
6,09,000 |
76,000 |
5,33,000 |
87.52 |
|
Less: Income Tax |
3,04,000 |
30,400 |
2,74,100 |
90 |
|
6. Profit After Tax |
3,04,000 |
45,600 |
2,58,900 |
85.02 |
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 + Manufacturing expenses + Other operating expenses
Other Expenses (2016) = 10,000 + 35,000 + 20,000 = Rs 65,000
Other Expenses (2017) = 30,000 + 80,000 + 10,000 = Rs 1,20,000
