Lesson eLearning

Ravi Industries has the following for the year ended 31 March 2026 (all amounts in ₹ thousands): Turnover ₹12,00,000; Cost of sales ₹7,80,000; Selling and administrative expenses ₹1,20,000; Interest expense ₹50,000; Depreciation ₹30,000; Dividend received ₹10,000; Tax rate 30%. Prepare the Income Statement and calculate the Net profit after tax.

medium 3 marks Class 12 · Accountancy · Financial Statements of a Company
Answer
₹1,61,000

The correct answer is ₹1,61,000 — Calculate Net profit after tax: ₹2,30,000 – ₹69,000 = ₹1,61,000.

Step-by-step solution

  1. Compute Gross profit: ₹12,00,000 – ₹7,80,000 = ₹4,20,000.
  2. Calculate Operating profit: ₹4,20,000 – ₹1,20,000 = ₹3,00,000.
  3. Add Depreciation: ₹3,00,000 – ₹30,000 = ₹2,70,000 (profit before interest).
  4. Subtract Interest expense: ₹2,70,000 – ₹50,000 = ₹2,20,000.
  5. Add Dividend received: ₹2,20,000 + ₹10,000 = ₹2,30,000 (Profit before tax).
  6. Compute tax: 30% of ₹2,30,000 = ₹69,000.
  7. Calculate Net profit after tax: ₹2,30,000 – ₹69,000 = ₹1,61,000.
Common mistake: Treating dividend received as expense or forgetting to add it

Concept tested: Income statement preparation

Published · How this solution was prepared and checked

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