Question

Prepare a Common size statement of profit and loss of Shefali Ltd. with the help of following information:

Particulars	2015-16 (Rs)	2016-17 (Rs)
Revenue from operations	6,00,000	8,00,000
Indirect expense	25% of gross profit	25% of gross profit
Cost of revenue from operations	4,28,000	7,28,000
Other incomes	10,000	12,000
Income tax	30%	30%

Answer 1

Common Size Income Statement for the years ended March 31, 2016 and 20174
Particulars	Note No.	2015-16 (₹)	2016-17 (₹)	Percentage of Sales
				2015-16	2016-17
1. Revenue from Operations		6,00,000	8,00,000	100	100
2. Other Income		10,000	12,000	1.67	1.5
3. Total Revenue (1 + 2)		6,10,000	8,12,000	101.67	101.5
4. Expenses
a. Cost of Revenue from Operations (COGS)		4,28,000	7,28,000	71.33	91
b. Other Expenses		43,000	18,000	7.17	2.25
Total Expenses		4,71,000	7,46,000	78.5	93.25
5. Profit before Tax (3 – 4)		1,39,000	66,000	23.167	8.25
Less: Income Tax		(41,700)	(19,800)	5.35
6. Profit After Tax		97,300	46,200	16.22	5.775

Working Notes:

1. Calculation of Other Expenses

Other Expenses = Indirect Expenses = % of Gross Profit
Gross Profit = Net Sales $-$ Revenue from Operations
For 2016, Gross Profit = ₹(6,00,000 $-$ 4,28,000) = ₹1,72,000
For 2017, Gross Profit = ₹(8,00,000 $-$ 7,28,000) = ₹72,000
$$\begin{gathered} 2016=1,72,000\times 25\%=₹43,000 \\ 2017=72,000\times 25\%=₹18,000 \end{gathered}$$