From the following information calculate Net Profit Before Tax and Extra Ordinary items.               

₹5,90,000

The correct answer is option 1- ₹5,90,000.

CALCULATION OF NET PROFIT BEFORE TAX AND EXTRAORDINARY ITEMS-

Balance in Statement of Profit and Loss in 2021          = 6,20,000
Less: Balance in Statement of Profit and Loss in 2020 = 3,00,000
                                                                             = (6,20,000  - 3,00,000)
                                                                             = 3,20,000

Add: Proposed dividend of the year 2020 = 2,20,000
                                                            = (3,20,000 + 2,20,000)
                                                            = 5,40,000

Add: Dividend paid on preference capital = 50,000
                                                            = (5,40,000 + 50,000)
                                                            = 5,90,000

* Preference share dividend is paid after that equity share dividend is proposed.
* Proposed dividend of the previous year is added back as it is paid in the current year and shown as cash outflow under the financing activity.
* Proposed dividend of the current year has no effect on the cash flow statement in the current year. It is paid in the next year after approval at shareholder's meeting.