ESTIMATED PROFIT AND LOSS ACCOUNT (INCOME STATEMENT) FOR KARACHI TRADERS LTD Revenue (5000 units @ $3.00) Cost of goods sold (@ $1.00 per unit) Gross profit Overhead expenses 15000 5000 10000 4000 Operating profit (profit before tax and interest) Finance costs (interest) 6000 2000 Profit before tax 4000 Corporation tax e 20% Profit for the year Dividends paid Retained profit 800 3200 1200 2000 Profit and loss account for Karachi Traders Ltd for the year ending 31 December 2014 20 marks, 40 minutes 1. By amending this profit and loss account (income statement), calculate the new level of retained profits if the following changes actually occurred: • each unit was sold for $4.00 • the cost of each unit sold rose to $1.60 • overhead expenses rose by 25% • interest costs were reduced by 50% • corporation tax rate rose to 25%. Assume dividends remain unchanged. 2. Amend the original profit and loss account to show: • the number of units sold has increased by 20%, but the selling price remains unchanged • the cost of goods sold per unit has fallen to $0.90 • transport costs (included in overheads) have increased by $500. Calculate the new level of retained profit assuming no other change to overheads, interest, corporation tax and dividends.
ESTIMATED PROFIT AND LOSS ACCOUNT (INCOME STATEMENT) FOR KARACHI TRADERS LTD Revenue (5000 units @ $3.00) Cost of goods sold (@ $1.00 per unit) Gross profit Overhead expenses 15000 5000 10000 4000 Operating profit (profit before tax and interest) Finance costs (interest) 6000 2000 Profit before tax 4000 Corporation tax e 20% Profit for the year Dividends paid Retained profit 800 3200 1200 2000 Profit and loss account for Karachi Traders Ltd for the year ending 31 December 2014 20 marks, 40 minutes 1. By amending this profit and loss account (income statement), calculate the new level of retained profits if the following changes actually occurred: • each unit was sold for $4.00 • the cost of each unit sold rose to $1.60 • overhead expenses rose by 25% • interest costs were reduced by 50% • corporation tax rate rose to 25%. Assume dividends remain unchanged. 2. Amend the original profit and loss account to show: • the number of units sold has increased by 20%, but the selling price remains unchanged • the cost of goods sold per unit has fallen to $0.90 • transport costs (included in overheads) have increased by $500. Calculate the new level of retained profit assuming no other change to overheads, interest, corporation tax and dividends.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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ESTIMATED PROFIT AND LOSS ACCOUNT (INCOME STATEMENT) FOR KARACHI
TRADERS LTD
$
Revenue (5000 units @ $3.00)
15000
Cost of goods sold (@ $1.00 per unit)
Gross profit
5000
10000
Overhead expenses
4000
Operating profit (profit before tax and interest)
6000
Finance costs (interest)
2000
Profit before tax
4000
Corporation tax @ 20%
Profit for the year
800
3200
Dividends paid
1200
Retained profit
2000
Profit and loss account for Karachi Traders Ltd for the year ending 31 December 2014
20 marks, 40 minutes
1. By amending this profit and loss account (income statement), calculate the new
level of retained profits if the following changes actually occurred:
• each unit was sold for $4.00
• the cost of each unit sold rose to $1.60
• overhead expenses rose by 25%
• interest costs were reduced by 50%
• corporation tax rate rose to 25%.
Assume dividends remain unchanged.
2. Amend the original profit and loss account to show:
• the number of units sold has increased by 20%, but the selling price remains
unchanged
• the cost of goods sold per unit has fallen to $0.90
• transport costs (included in overheads) have increased by $500.
Calculate the new level of retained profit assuming no other change to
overheads, interest, corporation tax and dividends.
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