Convert the following Trading and Profit and Loss Account into Vertical Income Statement:
| Dr. | Trading, Profit and Loss Account (for the year ended 31 st March, 2020) | Cr. | |
| --- | --- | --- | --- |
| Particulars | Amount (₹) | Particulars | Amount (₹) |
| To Opening stoc

Question

Convert the following Trading and Profit and Loss Account into Vertical Income Statement:
| Dr. | Trading, Profit and Loss Account (for the year ended 31 st March, 2020) | Cr. |  |
| --- | --- | --- | --- |
| Particulars | Amount (₹) | Particulars | Amount (₹) |
| To Opening stock | 50,000 | By Sales | 6,00,000 |
| To Purchases | 4,50,000 | By Closing Stock | 1,50,000 |
| To Carriage | 20,000 |  |  |
| To Direct expenses | 30,000 |  |  |
| To Wages | 50,000 |  |  |
| To Gross Profit c/d | 1,50,000 |  |  |
| Total | 7,50,000 |  | 7,50,000 |
| To Office expenses | 62,500 | By Gross Profit b/d | 1,50,000 |
| To Finance expenses | 15,000 |  |  |
| To Selling expenses | 50,000 |  |  |
| To Net Profit c/d | 22,500 |  |  |
| Total | 1,50,000 |  | 1,50,000 |

Accepted Answer

>

> [!TLDR]
> The same figures are simply re-presented vertically. Cost of Goods Sold = Opening stock + Purchases + Carriage + Direct expenses + Wages − Closing stock = ₹4,50,000, giving Gross Profit ₹1,50,000. Office and selling expenses (₹1,12,500) are operating; finance expenses (₹15,000) are shown separately; final Net Profit is ₹22,500 — the same figure as in the given account.
>
> **Working — Cost of Goods Sold**
>
> | Particulars | ₹ |
> | --- | --- |
> | Opening Stock | 50,000 |
> | Add: Purchases | 4,50,000 |
> | Add: Carriage | 20,000 |
> | Add: Direct expenses | 30,000 |
> | Add: Wages | 50,000 |
> | Less: Closing Stock | (1,50,000) |
> | **Cost of Goods Sold** | **4,50,000** |
>
> **Vertical Income Statement (for the year ended 31 March 2020)**
>
> | Particulars | Details (₹) | Amount (₹) |
> | --- | --- | --- |
> | Net Sales | | 6,00,000 |
> | Less: Cost of Goods Sold (working above) | | 4,50,000 |
> | **Gross Profit** | | **1,50,000** |
> | Less: Operating Expenses: | | |
> |   Office expenses | 62,500 | | …

Dr.	Trading, Profit and Loss Account (for the year ended 31 st March, 2020)	Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Opening stock	50,000	By Sales	6,00,000
To Purchases	4,50,000	By Closing Stock	1,50,000
To Carriage	20,000
To Direct expenses	30,000
To Wages	50,000
To Gross Profit c/d	1,50,000
Total	7,50,000		7,50,000
To Office expenses	62,500	By Gross Profit b/d	1,50,000
To Finance expenses	15,000
To Selling expenses	50,000
To Net Profit c/d	22,500
Total	1,50,000		1,50,000

Particulars	₹
Opening Stock	50,000
Add: Purchases	4,50,000
Add: Carriage	20,000
Add: Direct expenses	30,000
Add: Wages	50,000
Less: Closing Stock	(1,50,000)
Cost of Goods Sold	4,50,000

Particulars	Details (₹)	Amount (₹)
Net Sales		6,00,000
Less: Cost of Goods Sold (working above)		4,50,000
Gross Profit		1,50,000
Less: Operating Expenses:
Office expenses	62,500

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