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Professional income

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professional income

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Profits and Gains of Business or Profession
Business Definition: “Any trade, commerce, manufacture or any adventure or concern in the nature of trade, commerce and manufacture” Economic activity carried on for earning profits
Profession Section 2(36) Lawyer, Doctor, Accountant, Engineer, Surgeon, author etc., It is an occupation requiring purely intellectual skill or manual skill controlled by the intellectual skill of the operator.
Doctor or Medical Practitioner
Chartered Accountant
Lawyer or an Advocate
Problem 1 Prepare income from profession of Dr. S.K. Kapoor if accounts are maintained on cash/receipt system. Expenses Rs Income Rs Dispensary rent Electricity and water charges Telephone expenses Salary to nurse and compounder Dep. On surgical equipment Purchase of medicines Depreciation on X-ray Machine Income tax Donation to Rama Krishna Mission Motor car expenses Dep. On car Net Income 36000 6000 6000 36000 6000 38000 4000 5500 4000 9600 4800 93100 Visiting fees Consultation fees Sale of Medicines Dividends 45000 125000 72000 5000 247000 247000
Note: 1. Electricity and water charges include domestic bill of Rs 2500. 2. Half of motor car expenses are for personal use. 3. Telephone expenses include 40% for personal use 4. Opening stock of medicines was Rs 6000 and closing stock was Rs 4000.
Computation of Professional Income Particulars ₹ ₹ Professional Receipts Visiting fees 45000 Consultation fees 125000 Sale of Medicines 72000 242000
Particulars ₹ ₹ Less: Professional Expenses Dispensary rent 36000 Electricity and water charges (6000-2500) 3500 Telephone expenses (6000*60%) 3600 Salary of staff 36000 Depreciation on surgical equipment 6000 Cost of medicines 38000 Depreciation on X-ray machine 4000 Motor car expenses (9600-4800) 4800 Depreciation on car (4800-2400) 2400 134300 Professional Gain 107700
Computation of Professional Income Particulars ₹ ₹ Professional Receipts Visiting fees 45000 Consultation fees 125000 Sale of Medicines 72000 242000 Less: Professional Expenses Dispensary rent 36000 Electricity and water charges (6000-2500) 3500 Telephone expenses (6000*60%) 3600 Salary of staff 36000 Depreciation on surgical equipment 6000 Cost of medicines (6000+36000-4000) 38000 Depreciation on X-ray machine 4000 Motor car expenses (9600-4800) 4800 Depreciation on car (4800-2400) 2400 134300 Professional Gain 107700
Computation of Professional Income Particulars ₹ ₹ Professional Receipts Audit fees 224000 Financial Consultation works 98000 Accountancy works 24000 346000
Particulars ₹ ₹ Less: Professional Expenses Office rent 42000 Telephone installation charges 15000 Electricity bill 4200 Salary of staff 66000 Car expenses (21000*70%) 14700 Subscription for journal 2500 Institute fees 1200 Stipends to trainees 12000 Depreciation on car(5000-1500) 3500 161100 Professional Gain 184900
Computation of Professional Income Particulars ₹ ₹ Professional Receipt Consultation fees 10000 Visiting fees 20000 30000
Particulars ₹ ₹ Less: Professional Expenses Depreciation on car 30000*15/100 4500 Salaries 8000 Establishment expenses 1000 Depreciation on surgical equipment 4000*15/100 600 Depreciation on book 2000*40/100 800 14900 Professional Gain 15100
Computation of Professional Income Particulars ₹ ₹ Professional Receipts Consultation fees 60000 Visiting fees 45000 Gifts and presents 5000 Sale of medicine 42000 152000
Particulars ₹ ₹ Less: Professional Expenses Rent of clinic 18000 Cost of medical expenses 38000 Staff salaries 24000 Depreciation on surgical equipment's 40000*15/100 6000 Motor Car expenses (8000*50%) 4000 Depreciation on Motor car (140000*15/100=21000) (21000*1/2=10500) (10500*50%=5250) 5250 96250 Professional Gain 56750
Computation of Professional Income Particulars ₹ ₹ Professional Receipts Legal fees 84400 Gift from clients 10000-2000 8000 92400
Particulars ₹ ₹ Less: Professional Expenses Rent 2400 Telephone 3000 Salaries 2400 Subscription to law journal 240 Travelling 560 Office expenses 600 Purchase of stamp court fees Stamp 7600 16800 Professional Gain 75600
Computation of Professional Income Particulars ₹ ₹ Professional Receipts Consultation fees 20000 Visiting fees 30000 Sale of medicine 60000 Gift & presents 3000 Remuneration from journal 6000 119000
Particulars ₹ ₹ Less: Professional Expenses Rent of clinic 6000 Electricity & water bill 2000 Purchase of profession book 4000*40/100 1600 Depreciation on Motor car 30000*15/100 3000 Depreciation on Surgical equipment 4800*15/100 720 Salary to staff 15000 Interest on loan for profession 2000 Car expenses 15000*2/3 10000 Purchase of medicine 40000 80320 Professional Gain 38680
Q.No: 40. Dr. Pratibha a Medical Practitioner, furnishes the following Receipts and Payments Account for the year ended 31st March,2021.
Computation of Professional Income Particulars ₹ ₹ Professional Receipts Consultation fees 9000 Visiting fees 15000 Sale of medicine 13500 Gift from patients 4000 41500
Particulars ₹ ₹ Less: Professional Expenses Rent of clinic 3000 Cost of medicine 6000 Subscription to medical magazines 100 Depreciation on Motor car 30000*15/100*2/3 3000 Depreciation on Surgical equipment 900*15/100 135 Salary to compounder 2000 Car expenses 2000 16235 Professional Gain 25265
36

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Professional income

  • 1. Profits and Gains of Business or Profession
  • 2. Business Definition: “Any trade, commerce, manufacture or any adventure or concern in the nature of trade, commerce and manufacture” Economic activity carried on for earning profits
  • 3. Profession Section 2(36) Lawyer, Doctor, Accountant, Engineer, Surgeon, author etc., It is an occupation requiring purely intellectual skill or manual skill controlled by the intellectual skill of the operator.
  • 5.
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  • 8.
  • 9.
  • 11.
  • 12. Problem 1 Prepare income from profession of Dr. S.K. Kapoor if accounts are maintained on cash/receipt system. Expenses Rs Income Rs Dispensary rent Electricity and water charges Telephone expenses Salary to nurse and compounder Dep. On surgical equipment Purchase of medicines Depreciation on X-ray Machine Income tax Donation to Rama Krishna Mission Motor car expenses Dep. On car Net Income 36000 6000 6000 36000 6000 38000 4000 5500 4000 9600 4800 93100 Visiting fees Consultation fees Sale of Medicines Dividends 45000 125000 72000 5000 247000 247000
  • 13. Note: 1. Electricity and water charges include domestic bill of Rs 2500. 2. Half of motor car expenses are for personal use. 3. Telephone expenses include 40% for personal use 4. Opening stock of medicines was Rs 6000 and closing stock was Rs 4000.
  • 14. Computation of Professional Income Particulars ₹ ₹ Professional Receipts Visiting fees 45000 Consultation fees 125000 Sale of Medicines 72000 242000
  • 15. Particulars ₹ ₹ Less: Professional Expenses Dispensary rent 36000 Electricity and water charges (6000-2500) 3500 Telephone expenses (6000*60%) 3600 Salary of staff 36000 Depreciation on surgical equipment 6000 Cost of medicines 38000 Depreciation on X-ray machine 4000 Motor car expenses (9600-4800) 4800 Depreciation on car (4800-2400) 2400 134300 Professional Gain 107700
  • 16. Computation of Professional Income Particulars ₹ ₹ Professional Receipts Visiting fees 45000 Consultation fees 125000 Sale of Medicines 72000 242000 Less: Professional Expenses Dispensary rent 36000 Electricity and water charges (6000-2500) 3500 Telephone expenses (6000*60%) 3600 Salary of staff 36000 Depreciation on surgical equipment 6000 Cost of medicines (6000+36000-4000) 38000 Depreciation on X-ray machine 4000 Motor car expenses (9600-4800) 4800 Depreciation on car (4800-2400) 2400 134300 Professional Gain 107700
  • 17.
  • 18.
  • 19. Computation of Professional Income Particulars ₹ ₹ Professional Receipts Audit fees 224000 Financial Consultation works 98000 Accountancy works 24000 346000
  • 20. Particulars ₹ ₹ Less: Professional Expenses Office rent 42000 Telephone installation charges 15000 Electricity bill 4200 Salary of staff 66000 Car expenses (21000*70%) 14700 Subscription for journal 2500 Institute fees 1200 Stipends to trainees 12000 Depreciation on car(5000-1500) 3500 161100 Professional Gain 184900
  • 21.
  • 22. Computation of Professional Income Particulars ₹ ₹ Professional Receipt Consultation fees 10000 Visiting fees 20000 30000
  • 23. Particulars ₹ ₹ Less: Professional Expenses Depreciation on car 30000*15/100 4500 Salaries 8000 Establishment expenses 1000 Depreciation on surgical equipment 4000*15/100 600 Depreciation on book 2000*40/100 800 14900 Professional Gain 15100
  • 24.
  • 25. Computation of Professional Income Particulars ₹ ₹ Professional Receipts Consultation fees 60000 Visiting fees 45000 Gifts and presents 5000 Sale of medicine 42000 152000
  • 26. Particulars ₹ ₹ Less: Professional Expenses Rent of clinic 18000 Cost of medical expenses 38000 Staff salaries 24000 Depreciation on surgical equipment's 40000*15/100 6000 Motor Car expenses (8000*50%) 4000 Depreciation on Motor car (140000*15/100=21000) (21000*1/2=10500) (10500*50%=5250) 5250 96250 Professional Gain 56750
  • 27.
  • 28. Computation of Professional Income Particulars ₹ ₹ Professional Receipts Legal fees 84400 Gift from clients 10000-2000 8000 92400
  • 29. Particulars ₹ ₹ Less: Professional Expenses Rent 2400 Telephone 3000 Salaries 2400 Subscription to law journal 240 Travelling 560 Office expenses 600 Purchase of stamp court fees Stamp 7600 16800 Professional Gain 75600
  • 30.
  • 31. Computation of Professional Income Particulars ₹ ₹ Professional Receipts Consultation fees 20000 Visiting fees 30000 Sale of medicine 60000 Gift & presents 3000 Remuneration from journal 6000 119000
  • 32. Particulars ₹ ₹ Less: Professional Expenses Rent of clinic 6000 Electricity & water bill 2000 Purchase of profession book 4000*40/100 1600 Depreciation on Motor car 30000*15/100 3000 Depreciation on Surgical equipment 4800*15/100 720 Salary to staff 15000 Interest on loan for profession 2000 Car expenses 15000*2/3 10000 Purchase of medicine 40000 80320 Professional Gain 38680
  • 33. Q.No: 40. Dr. Pratibha a Medical Practitioner, furnishes the following Receipts and Payments Account for the year ended 31st March,2021.
  • 34. Computation of Professional Income Particulars ₹ ₹ Professional Receipts Consultation fees 9000 Visiting fees 15000 Sale of medicine 13500 Gift from patients 4000 41500
  • 35. Particulars ₹ ₹ Less: Professional Expenses Rent of clinic 3000 Cost of medicine 6000 Subscription to medical magazines 100 Depreciation on Motor car 30000*15/100*2/3 3000 Depreciation on Surgical equipment 900*15/100 135 Salary to compounder 2000 Car expenses 2000 16235 Professional Gain 25265
  • 36. 36