Model: Composition of clear profit From the following details of an electric supply company, maintaining accounts under double account system, calculate the following:(a) capital base; (b) reasonable return; (c) clear profit and (d) amounts available for dividends and contribution to tariff and dividend control reserve and consumer’s rebate reserve.

Rs.

Sale of Energy

14,60,000

Meter Rents

60,000

Transfer Fees

1,500

Cost of Generation

8,80,000

Distribution and Selling Expenses

80,000

Rent, Rates & Taxes

30,000

Audit Fees

2,400

Intangibles Written Off

9,000

Management Expenses

26,000

Depreciation

96,000

Interest on Loan of State Electricity Board

5,000

Contingency Reserve Investment Income

5,000

Interest on Security Deposit

1,000

Interest from Bank

800

Contribution to Provident Fund

70,000

No tax is payable for the year.

Original cost of fixed assets: Rs.48,00,000; contributions by consumers for acquisition of such fixed assets: Rs.2,40,000; cost of intangibles: Rs.1,60,000; contingency reserve investments: Rs.1,20,000; stores: opening Rs.1,00,000 and closing Rs.1,40,000; cash and bank balances: opening Rs.1,20,000 and closing Rs.80,000.

Depreciation up to the beginning of the year: Rs.8,70,000; intangibles written off up to the beginning of the year; Rs.70,000; security deposit of customers held in cash: Rs.30,000; Tariffs and dividend control reserve at the beginning of the year: Rs.1,80,000; Development reserve as the beginning of the year: Rs.2,60,000; amount carried forward for distribution to consumers: Rs.40,000; loan from state electricity board: Rs.1,20,000. There is no addition to plant and machinery. Transfer to contingency reserve was Rs.14,000and assume RBI rate as 8%.