prepare a good profit and loss account as a table form

Question

ScanSolve AI Tutor · Accepted Answer

Step 1: Identify revenue and cost of goods sold to calculate gross profit. Revenue: Sales: 1,500,000 Cost of Goods Sold: Opening Inventory: 200,000 Purchases: 800,000 Closing Inventory: 300,000 Cost of Goods Sold = Opening Inventory + Purchases - Closing Inventory; Cost of Goods Sold = 200,000 + 800,000 − 300,000 = 700,000 Step 2: Calculate gross profit. Gross Profit = Revenue - Cost of Goods Sold; Gross Profit = 1,500,000 − 700,000 = 800,000 Step 3: Identify operating expenses. Salaries and Wages: 150,000 Rent: 50,000 Utilities: 20,000 Depreciation: 30,000 Insurance: 10,000 Total Operating Expenses = 150,000 + 50,000 + 20,000 + 30,000 + 10,000 = 260,000 Step 4: Calculate operating profit. Operating Profit = Gross Profit - Total Operating Expenses; Operating Profit = 800,000 − 260,000 = 540,000 Step 5: Identify other income and expenses. Interest Income: 5,000 Interest Expense: 15,000 Step 6: Calculate profit before tax. Profit Before Tax = Operating Profit + Interest Income - Interest Expense; Profit Before Tax = 540,000 + 5,000 − 15,000 = 530,000 Step 7: Calculate income tax expense. Income Tax Expense: 106,000 Step 8: Calculate net profit. Net Profit = Profit Before Tax - Income Tax Expense; Net Profit = 530,000 − 106,000 = 424,000 Profit and Loss Account Description — Amount ($)Revenue Sales — 1,500,000 Less: Cost of Goods Sold — (700,000) Gross Profit — 800,000 Operating Expenses Salaries and Wages — (150,000) Rent — (50,000) Utilities — (20,000) Depreciation — (30,000) Insurance — (10,000) Operating Profit — 540,000 Other Income/(Expenses) Interest Income — 5,000 Interest Expense — (15,000) Profit Before Tax — 530,000 Less: Income Tax Expense — (106,000) Net Profit — 424,000

Description	Amount ($)
Revenue
Sales	1,500,000
Less: Cost of Goods Sold	$(700,000)$
Gross Profit	800,000
Operating Expenses
Salaries and Wages	$(150,000)$
Rent	$(50,000)$
Utilities	$(20,000)$
Depreciation	$(30,000)$
Insurance	$(10,000)$
Operating Profit	540,000
Other Income/(Expenses)
Interest Income	5,000
Interest Expense	$(15,000)$
Profit Before Tax	530,000
Less: Income Tax Expense	$(106,000)$
Net Profit	424,000

Prepare a good profit and loss account as a table form

Step-by-step solution

Identify revenue and cost of goods sold to calculate gross profit.

Calculate gross profit.

Identify operating expenses.

Calculate operating profit.

Identify other income and expenses.

Calculate profit before tax.

Calculate income tax expense.

Calculate net profit.

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