Class Notes

Class: XII Topic: CASH FLOW STATEMENT(Contd.)

Subject: ACCOUNTANCY

Some examples:
Example.1From the following information for the year ended 31 st March,2019,calculate Net Profit before Tax
and Extraordinary Items:

PARTICULARS AMOUNT(Rs)
Surplus ,i.e., Balance in Statement of Profit and Loss (opening) 2,00,000
Surplus ,i.e., Balance in Statement of Profit and Loss (closing) 6,72,000
Transfer to Debenture Redemption Reserve 2,00,000
Proposed Dividend for the previous year ended 31 st March,2018 1,80,000
Interim Dividend paid during the year 1,44,000
Provision for Tax made during the Current Year 2,00,000
Income Tax Paid 2,16,000
Solution: CALCULATION OF NET PROFIT BEFORE TAX AND EXTRAORDINARY ITEMS
PARTICULARS AMOUNT (Rs)
Net Profit as per Surplus ,i.e., Balance in Statement of Profit and Loss 4,72,000
(6,72,000-2,00,000)
Add: Transfer to Debenture Redemption Reserve 2,00,000
Dividend Paid(Proposed Dividend for the year 31 st March,2018) 1,80,000
Interim Dividend paid during the year 1,44,000
Provision for Tax made during the Current Year 2,00,000 7,24,000
Net Profit before Tax and Extraordinary Items 11,96,000

Example.2Following is the Extract of Balance Sheet of KBC Ltd.

Equity and Liabilities 31st March, 31st March,
2019(Rs) 2018(Rs)
Surplus ,i.e., Balance in Statement of Profit and loss 8,00,000 5,00,000
Dividend Payable 30,000 -
Dividend Proposed for the year ended 31 st March,2018 was Rs. 3,00,000 and for the current year Rs 3,50,000.
Prepare the Note to show Net Profit before Tax and Extraordinary items

Solution -CALCULATION OF NET PROFIT BEFORE TAX AND EXTRAORDINARY ITEMS

PARTICULARS AMOUNT (Rs)
Net Profit as per Surplus ,i.e., Balance in Statement of Profit and Loss 3,00,000
(8,00,000-5,00,000)
Add: Dividend Payable (Debited to Surplus, i.e., Balance in Statement of Profit and 3,00,000
Loss) during the year

Net Profit before Tax and Extraordinary Items 6,00,000

Example.3From the following information for the year ended 31 st March,2018,calculate Net Profit before Tax
and Extraordinary items:
PARTICULARS AMOUNT(Rs)
 Surplus ,i.e., Balance in Statement of Profit and Loss (opening) (2,00,000)
Surplus ,i.e., Balance in Statement of Profit and Loss (closing) 5,40,000
Transfer to Workmen Compensation Reserve 1,50,000
Proposed Dividend for the year ended 31 st March,2018 3,15,000
Proposed Dividend for the year ended 31 st March,2017 2,10,000
Provision for Tax made during the Current Year 2,30,000

Solution: CALCULATION OF NET PROFIT BEFORE TAX AND EXTRAORDINARY ITEMS

PARTICULARS
Net Profit as per Surplus ,i.e., Balance in Statement of Profit and Loss 7,40,000
(5,40,000+2,00,000)
Add: Transfer to Workmen Compensation Reserve 1,50,000
Dividend Paid(Proposed Dividend for the year 31 st March,2017) 2,10,000
Provision for Tax made during the Current Year 2,30,000
5,90,000
Net Profit before Tax and Extraordinary Items 13,30,000

Example.4 Calculate Net Profit before Tax and Extraordinary Items from the following Balance Sheet of Melon
Ltd.as at 31st March,2019:

PARTICULARS NOTE 31st March, 31st March,

NO. 2019(Rs) 2018(Rs)
I. EQUITY AND LIABILITES
1. Shareholder’s Funds
(a) Share Capital 1 8,00,000 8,00,000
(b) Reserves and Surplus 2 6,95,000 5,20,000
2. Non-Current Liabilities
Long-term Borrowings 5,00,000 5,00,000
3. Current Liabilities
(a) Trade Payables 60,000 50,000
(b) Other Current Liabilities 1,00,000 75,000
(c) Short-term Provisions 3 1,50,000 1,00,000
Total 23,05,000 20,45,000

II. ASSETS
1. Non-Current Assets
18,40,000 15,55,000
(a) Fixed Assets
3,00,000 3,00,000
(b) Non-current Investments
1,65,000 1,90,000
2. Current Assets
23,05,000 20,45,000
Total

Notes to Accounts:

1. Share Capital
5,00,000 5,00,000
Equity Share Capital
3,00,000 3,00,000
Preference Share Capital

8,00,000 8,00,000
 2.Reserves and Surplus
General Reserve 2,75,000 2,10,000
Workmen Compensation 2,50,000 2,00,000
Surplus ,i.e. ,Balance in Statement of Profit and Loss 1,70,000 1,10,000

6,95,000 5,20,000
3.Short-term Provisions

Provision for Tax 1,50,000 1,00,000

Note: Proposed Dividend for the years ended 31st March, 2019 and 2018 are Rs 1,60,000 and Rs 80,000
respectively.

Solution: CALCULATION OF NET PROFIT BEFORE TAX AND EXTRAORDINARY ITEMS

PARTICULARS Amount(Rs)
Net Profit for the year(Difference between closing and Opening Surplus ,i.e.,
Balance in Statement of Profit and Loss) (Rs1,70,000-Rs1,10,000) 60,000
Add: Transfer to General Reserve (Rs2,75,000- Rs2,10,000) 65,000
Transfer to Workmen Compensation Reserve (Rs2,50,000- Rs2,00,000) 50,000
Dividend Paid(Proposed Dividend for the year 31 st March,2018) 80,000
Provision for Tax made (Current Year) 1,50,000

Net Profit before Tax and Extraordinary Items 4,05,000

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