We need to extract only the items that appear in a Statement of Profit and Loss (Revenue from Operations, Expenses, and Tax). Items like Building, Depreciation, Interest, Debentures, Profit/Loss on sale, and Other operating expenses are relevant; personal car loss is ignored (it is a personal expense, not a business item). Returns outward is a contra to purchases, but we need to compute Cost of Revenue from Operations (i.e., Cost of Goods Sold) first.

Step 1 – Compute Cost of Revenue from Operations for each year

2015-16

• Opening stock = ₹30,000
• Closing stock = 150% of opening stock = 150% × ₹30,000 = ₹45,000
• Credit purchases = ₹1,50,000
• Cash purchases = 80% of credit purchases = 80% × ₹1,50,000 = ₹1,20,000
• Total purchases = ₹1,50,000 + ₹1,20,000 = ₹2,70,000
• Returns outward = ₹4,000 (given as “out of credit purchase”, so it reduces purchases)
• Net purchases = ₹2,70,000 – ₹4,000 = ₹2,66,000
• Manufacturing expenses = ₹35,000
• Cost of Revenue from Operations = Opening stock + Net purchases + Manufacturing expenses – Closing stock = ₹30,000 + ₹2,66,000 + ₹35,000 – ₹45,000 = ₹2,86,000

2016-17

• Closing stock = ₹1,00,000
• Opening stock = 60% of closing stock = 60% × ₹1,00,000 = ₹60,000
• Cash purchases = ₹40,000
• Credit purchases = 150% of cash purchases = 150% × ₹40,000 = ₹60,000
• Total purchases = ₹40,000 + ₹60,000 = ₹1,00,000
• Returns outward = ₹6,000 (given as “out of cash purchase”, so reduces purchases)
• Net purchases = ₹1,00,000 – ₹6,000 = ₹94,000
• Manufacturing expenses = ₹80,000
• Cost of Revenue from Operations = ₹60,000 + ₹94,000 + ₹80,000 – ₹1,00,000 = ₹1,34,000

Step 2 – Identify other P&L items

• Sales = Revenue from Operations (no other revenue given)
• Carriage outward = part of Other Expenses
• Depreciation on building = 20% of ₹1,00,000 = ₹20,000 (2015-16); 10% of ₹2,00,000 = ₹20,000 (2016-17)
• Interest on bank overdraft = ₹5,000 (2015-16); nil for 2016-17 (given as “-”)
• Interest on 10% debentures = 10% × ₹2,00,000 = ₹20,000 (2015-16); 10% × ₹20,00,000 = ₹2,00,000 (2016-17)
• Profit on sale of copyright = Other Income
• Loss on sale of personal car = not a business expense, ignore
• Other operating expenses = ₹20,000 (2015-16); ₹10,000 (2016-17)
• Tax rate = 50% (2015-16); 40% (2016-17)

Step 3 – Prepare Comparative Statement of Profit and Loss

| Particulars | Note No. | 2015-16 (₹) | 2016-17 (₹) | Absolute Change (₹) | Percentage Change (%) | …

Concept and Accounting Treatment

A Comparative Statement of Profit and Loss presents financial performance across two periods side by side, so trends can be analysed. Revenue from Operations (Sales) less Cost of Revenue from Operations gives Gross Profit; from this we deduct operating expenses (carriage outward, depreciation, other operating expenses), add non-operating income (profit on sale of copyright) and deduct non-operating expenses (interest on bank overdraft and on debentures) to reach Profit before Tax, on which tax is charged.

Working Notes

1. Opening / Closing Stock
   • 2015-16: Opening Stock ₹30,000; Closing Stock = 150% of ₹30,000 = ₹45,000.
   • 2016-17: Closing Stock ₹1,00,000; Opening Stock = 60% of ₹1,00,000 = ₹60,000.
2. Purchases (net of returns outward)
   • 2015-16: Credit ₹1,50,000 + Cash (80% of ₹1,50,000 = ₹1,20,000) = ₹2,70,000, less Returns Outward ₹4,000 = ₹2,66,000.
   • 2016-17: Cash ₹40,000 + Credit (150% of ₹40,000 = ₹60,000) = ₹1,00,000, less Returns Outward ₹6,000 = ₹94,000.
3. Cost of Revenue from Operations = Opening Stock + Net Purchases + Manufacturing Expenses — Closing Stock
   • 2015-16: 30,000 + 2,66,000 + 35,000 — 45,000 = ₹2,86,000.
   • 2016-17: 60,000 + 94,000 + 80,000 — 1,00,000 = ₹1,34,000.
4. Depreciation on Building: 20% of ₹1,00,000 = ₹20,000 (2015-16); 10% of ₹2,00,000 = ₹20,000 (2016-17).
5. Finance Costs = Interest on bank overdraft + Interest on 10% debentures.
   • 2015-16: 5,000 + (10% of ₹2,00,000 = 20,000) = ₹25,000.
   • 2016-17: 0 (bank overdraft interest given as "—") + (10% of ₹20,00,000 = 2,00,000) = ₹2,00,000.
6. Other Income = Profit on sale of copyright = ₹10,000 (2015-16); ₹20,000 (2016-17).

Comparative Statement of Profit and Loss

Comparative Statement of Profit and Loss for the years ended 31st March, 2016 and 2017