Shri. Ram is the proprietor of a business. His Profit and Loss Account for the year
ending March 31st, 2019 is as follows:
Particulars Rs. Particulars Rs.
To Bad debts 22,000 By Gross Profit 2,65,500
To Provision for bad debts 21,000 By Brokerage 27,000
To General expenses 63,400 By Sundry receipts 22,500
To Insurance of house 600 By Commission 18,600
To Salary to staff 36,000 By Bad debts recovered (earlier
disallowed as deduction)
1,000
To Salary to Ram 22,000 By Interest on deposits with a trust 15,000
To Interest on loan (bank overdraft) 62,000 By Interest on units of U.T.I. 13,000
To Interest on loan taken from Mrs.
Ram Prasad
4,000 By House property 12,000
To Interest on Capital of Ram 13,000
To Advertising 8,000
To Contribution of employees RPF 12,000
To Depreciation on building 60,000
To Net Profit transferred to capital
account
50,600
3,74,600 3,74,600
Following further information is given:
a) The amount of depreciation allowable on building is Rs. 40,200 as per income-tax rules.
b) Advertisement expenditure includes Rs. 5,000 being cost of advertisement in P&L A/C.
c) Income Rs. 10,000 accrued during the year is not recorded in the profit and loss account.
d) Ram pays Rs. 12,000 as premium on own life insurance policy of Rs. 90,000.
e) General expenses include Rs. 4,500 given to Mrs. Ram for arranging a party.
Compute Business income of Shri. Ram for the assessment year 2020-21.
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