Numerical on Profits and Gains from Business and Profession

Numerical on Profits and Gains from Business and Profession

Q1.Ashwani Kumar has prepared the following Profit and Loss Account for the year ended 31.03.2015. You are required to ascertain his gross total income for the year ended on that date :

ParticularsAmountParticularsAmount

Salaries60,000Gross Profit1,50,000

Rent26,400Rent from house property 36,000

Loss by theft20,000

Discount10,000

Charity 500

VAT paid 6,000

Reserve for bad debts10,000

Gifts and presents 500

Life Insurance premium 1,000

Interest on loan12,000

Interest on capital 3,000

Repairs to house 500

Income tax 2,000

Net Profit 34,100

Total1,86,0001,86,000

Q2.R furnishes the following Trading, Profit and Loss for the previous year ending 31.03.2015

ParticularsAmountParticularsAmount

Stock2,40,000Sales79,76,900

Purchases72,60,000Stock4,60,000

Freight and duty50,000

Manufacturing wages1,20,000

Rent,rates and taxes45,000

Depreciation48,000

Gross Profit6,73,900

84,36,90084,36,900

Office salaries66,000Gross Profit6,73,900

Interest on capital12,000Rent of staff quarters19,000

Bad Debts9,000Refund of staff quarters1,100

Income tax11,000Refund of income tax penalty25,000

Expenses on income tax proceedings16,000Sale price of an old machinery25,000

Diwali expenses3,000Recovery of bad debts,not allowed to be deducted in earlier years6,000

Legal expenses6,000Sundry receipts35,000

Medical expenses of the proprietor in the Govt. hospital11,000

Staff welfare expenses4,000

Repairs of staff quarters11,000

Telephone expenses15,000

Bonus payable to employees30,000

Provision for taxes:

VAT and excise duty40,000

Muncipal taxes for staff quarters14,000

General reserve11,000

Entertainment expenses11,000

Net profit4,90,000

Total7,60,000Total7,60,000

You are required to compute the taxable profits from business after taking the following into considerations :

(i) Purchases include a purchase of Rs.28,000 whose payments are made by a crossed cheque

(ii)Office salaries include Rs.18,000 paid to the proprietor of the business

(iii) Diwali expenses include gifts of Rs1,500 made to relatives

(iv) The written down value of the block consisting of machinery as on 1.4.2014 is Rs.80,000

(v) The written down value of the block consisting of factory building as on 1.4.2014 is 1,20,000. An addition was made to building on 1.8.2014 at a cost of Rs.40,000. The newly added building was destroyed by fire and the insurance company paid Rs.41,000 as insurance compensation.

(vi) VAT and excise duty amounting to Rs.30,000 was paid on 25.6.2015

(vii) Muncipal taxes were due on 31.3.2015