From the following particulars, prepare Statement of profit and loss for the year ending March 2017, showing profit before tax as per schedule III of the companies Act – 2013.
| Particulars | Amount (₹) |
|---|---|
| Plant and Machinery | 1,60,000 |
| Land | 6,74,000 |
| Depreciation on Plant and Machinery | 16,000 |
| Purchases (Adjusted) | 4,00,000 |
| Closing stock | 1,50,000 |
| Wages | 1,20,000 |
| Sales (Net) | 10,00,000 |
| Salaries | 80,000 |
| Bank overdraft | 2,00,000 |
| 10% debentures (issued on 1st April, 2016) | 1,00,000 |
| Equity share capital – shares of ₹100 each (fully paid) | 2,00,000 |
| Preference share capital – 1,000; 6% shares of ₹100 each (fully paid) | 1,00,000 |
You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.
Start your 14-day free trial to unlock the full solution →Pick only the revenue/expense items: Sales ₹10,00,000 as Revenue from operations; adjusted purchases ₹4,00,000 as cost of materials consumed; wages + salaries ₹2,00,000 as employee benefits expense; interest on 10% debentures ₹10,000 as finance cost; and ₹16,000 depreciation — giving Profit before tax of ₹3,74,000.
Concept
A company's Statement of Profit and Loss under Schedule III lists income and expense items only; balance-sheet items in the trial balance (plant and machinery, land, share capital, bank overdraft, closing stock) are excluded. Wages and salaries together form Employee benefits expense. Finance cost is only the interest on borrowings — here 10% of the ₹1,00,000 debentures = ₹10,000. 'Purchases (Adjusted)' already reflects the opening/closing-stock adjustment, so it is taken directly as cost of materials consumed.
Working Notes
- Revenue from operations = Sales (Net) = ₹10,00,000.
- Cost of materials consumed = Purchases (Adjusted) = ₹4,00,000.
- Employee benefits expense = Wages ₹1,20,000 + Salaries ₹80,000 = ₹2,00,000.
- Finance cost = interest on 10% debentures = 10% × ₹1,00,000 = ₹10,000.
- Depreciation and amortisation = ₹16,000.
Solution — Statement of Profit and Loss for the year ending 31st March, 2017
| Particulars | Note No. | Amount (₹) |
|---|---|---|
| I. Income | ||
| Revenue from operations (Sales) | 10,00,000 | |
| Total | 10,00,000 | |
| II. Expenses | ||
| Cost of materials consumed (Adjusted purchase) | 4,00,000 | |
| Employees benefit expenses | 1 | 2,00,000 |
| Finance cost | 10,000 | |
| Depreciation and amortisation | 16,000 |
Unlock everything free for 14 days
- Full step-by-step solutions
- Concept-first explanations
- Methods, shortcuts & mistakes
- PYQ mapping + timed mock tests
Full access for 14 days. No credit card required.