Question

Find out net profit after tax from the following information:

Gross profit Rs. 1,25,000
Selling and distribution expenses Rs. 21,000
General and administrative expenses Rs. 75,000
Interest on loan Rs. 5,000
Gain on sale of plant Rs. 4,000
Income tax rate 25%

Answer 1

Net Profit after tax Rs 15,000

Explanation:

The computation of the net profit after tax is shown below:

Gross profit Rs. 1,25,000

Less:

Selling and distribution expenses Rs. 21,000

General and administrative expenses Rs. 75,000

Interest on loan Rs. 5,000

Gain on sale of plant Rs. 4,000

Profit before tax Rs 20,000

Less: income tax expense at 25% of Rs 20,000 Rs 5000

Net Profit after tax Rs 15,000