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Suppose, Sales = 100% =1

G.P                = 25% of CGS = 0.25 CGS

Sales – CGS = GP

1- CGS = 0.25 CGS

1                       =0.25 CGS + CGS

1                       = CGS(0.25 + 1)

1                       = 1.25 CGS

1/1.25 = CGS

0.8        = CGS

80% of sales = CGS

Sales – CGS = GP

1 – 0.80 = GP

0.20 = GP

20% of sales = GP

Sales – CGS = Operating + Selling & Admin Exp

1 – 0.80 sales = 50,000 + 0.15 sales

0.20 sales – 0.15 sales = 50,000

0.05 Sales                       = 50,000

Sales = 50,000/0.05

Sales = 1000,000

 

 

CGS (80% of sales)    = 1000,000 * 80%

                                    = 800,000

GP (20% of sales) = 1000,000 *20%

                                = 200,000

                                  Income Statement

Sales                                                                              1000, 000

Less: Cost of Goods Sold (CGS)                                       800,000

Gross Profit                                                                      200,000

Less: Selling Admin expense                                 150,000

           (15% of sales)

Operating Profit                                                                 50,000

 

Closing Stock        = Opening Stock + Purchases – CGS

                               = 500,000 + 700,000 – 800,000

                               = 1200,000 – 800,000

Closing Stock                 = 400,000

Closing inventory is deducted from cost of goods sold (CGS) because closing inventory is still in hand. According to “Matching concept” only those expenses can be recognized against which we have not recorded any revenue because closing inventory is not sold and still in hand. Therefore we shall not record closing inventory’s cost in CGS and shall deduct from cost of goods sold (CGS).

 

 

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Friends theak hai k nahi

good job

Excellent job Sir,you have cleared our all doubts without listening any lecture and studying the actual lessons                            

 Jazzak Allah.....plz keep in touch 

One thing you have not catered for which is Financial expenses 1%of selling.Is there any role of that in making fin statement.

bhai ye gdb ka 2nd gdb ka answer hah naa?

but bhai jaan aap ka th formula confused hy

pl check it 

Sales – CGS = Operating + Selling & Admin Exp

Nice

>>> Very well done.... 

*Note: This is long answer, the limit for words for our answer is 125 words... 

....... 

Nice Solution.

here a solution please check

Gays plz btae kia ye thek he

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where is the Financial expenses are 1% of sales??

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