Study the information given below carefully and answer the following question.
Radhika an alumni of IIM Bangalore initiated her startup Radhika Ltd. in 2020. The profits of Radhika Ltd in the year 2021-2022 after all appropriations was ₹31,25,000. This profit was arrived after taking into consideration the following items:-
| S No | Particulars | Amount ( In ₹) |
| 1 | Gain of sale of assets | 12,50,000 |
| 2 | Goodwill written off | 7,80,000 |
| 3 | Transfer to general Reserve | 8,75,000 |
| 4 | Provision for taxation | 4,37,500 |
Additional Information:
| S No | Particulars | 31.03.2022 ( In ₹) |
31.03.2021 (In ₹) |
| 1 | Prepaid Expenses | 7,50,000 | 5,00,000 |
| 2 | Inventory | 10,50,000 | 8,20,000 |
| 3 | Trades Payable | 4,50,000 | 3,50,000 |
| 4 | Trade Receivable | 6,20,000 | 5,90,000 |
Net Profit before tax and Extraordinary items will be ₹…………………………….
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹44,37,500.
Net profit before tax and Extraordinary items = Net profit after all appropriations + Transfer to general Reserve + Provision for taxation
= 31,25,000 + 4,37,500 + 8,75,000
= 44,37,500