Question

A firm starts it's operations on 1st April,
2019, by the infusion of Rs 50,00,000,
keeping a D/E of 1.5. The debt carries
an annual interest obligation of 7%. It
has acheived Sales of Rs 10 Million in
the FY 2019-20, at a mark up of 33
1/3% on Cost. The Operating Expenses
(including Depreciation) were
restricted to 20% of the Gross Profits.
Taxes were provided @ 30%.
Construct a Profit & Loss Account in
the Vertical Format?

Answer 1

Income Statement
Sales	10,000,000
Cost of goods sold (10,000,000 x 33.33%)	3,333,333
Gross Profit	6,666,667
Operating Expenses (6,666,667 x 20%)	1,333,333
Income From Operations	5,333,333
Other Expenses
Interest Expense (5,000,000 x 1.5/2.5 x 7%)	210,000
Income before income taxes	5,123,333
Income tax expense @30%	1,537,000
Net income	3,586,333