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%

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

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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

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

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Similar questions

Prepare Comparative Income Statement from the following information:

Particulars	2016-17 Rs.	2015-16 Rs.
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%

Q. Prepare Trading and Profit and Loss Account and Balance Sheet of Jagat Shah as at 31st March, 2018 from the following balances:

	₹		₹
Capital (Cr.)	3,60,000	Salaries	60,000
Machinery	70,000	General Expenses	20,000
Sales	8,20,000	Rent	50,000
Purchases	4,00,000	Purchases Return	5,000
Sales Return	10,000	Debtors	3,00,000
Stock on 1st April, 2017	1,00,000	Cash	40,000
Drawing	40,000	Carriage Outwards	20,000
Wages	1,00,000	Advertising	20,000
Carriage Inwards	5,000	Creditros	50,000

The Closing Stock was valued at ₹ 2,00,000.

Prepare trading and profit and loss account and balance sheet of M/s Royal Traders from the following balances as on March 31, 2017.

Debit balances	Amount Rs	Credit balances	Amount Rs
Stock	20,000	Sales	2,45,000
Cash	5,000	Creditors	10,000
Bank	10,000	Bills payable	4,000
Carriage on purchases	1,500	Capital	2,00,000
Purchases	1,90,000
Drawings	9,000
Wages	55,000
Machinery	1,00,000
Debtors	27,000
Postage	300
Sundry expenses	1,700
Rent	4,500
Furniture	35,000

Closing stock Rs 8,000.

Q. Ascertain Gross Profit from the following:

	₹		₹
Opening Stock	2,00,000	Carriage on Sales	30,000
Closing Stock	1,80,000	Office Rent	58,000
Purchases	8,50,000	Sales	14,07,000
Carriage on Purchases	23,000

Calculate closing stock from the following details opening stock Rs. 20,000; cash sales Rs. 60,000; credit sales Rs. 40,000; purchases Rs. 70,000. Rate of gross profit on cost $33 \frac{1}{3} %$ .

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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