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# Graded Discussion broad for MGT101 Financial Accounting(Closing Date Monday, August 03, 2015)

GDB for MGT101:
Discussion Scenario:
It is supposed that you are an accountant of a business. You have limited information because some financial data has been lost due to fire. Available information for the period is:

· Gross profit is 25% of cost of goods sold
· Operating profit Rs. 50,000
· Selling and administration expense are 15% of sales
· Financial expenses are 1% of sales
· Opening stock Rs. 500,000
· Purchases Rs. 700,000

Being a business graduate, you know the fundamentals of accountancy. You are required to determine the amount of sales and value of closing stock for the period. In addition to it, which basic principle/concept of accounting is applied to deduct value of closing stock from cost of goods available for sale for reporting? Also discuss the main logic for this deduction?

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### Replies to This Discussion

solution plzzzzz

Solution:
= 0.20 Sales - 0.15 Sales
= 50,000
0.05 Sales = 50,000
so Sales = 50,000 / 0.05
that is Rs. 1,000,000
Now solve Sales 1000,000 - CGS
= GP - Admin Exp 150,000
= Operating Profit
= 50,000
= GP 200,000
CGS = Sales 1000,000 - GP 200,000
= 800,000
Closing stock = Opening 500,000 + Purchase 700,000 - CGS 800,000
= 400,000

Nazish well-done

accurate solution ha

realy

yes bas is main apnay end pa discuss the main logic for this deduction?

and which basic principle/concept of accounting is applied to deduct value of closing stock from cost of goods available for sale for reporting?

in dono ko end pa lag sa discuss karna ha

good job Naazish sis.....

How we calculate the 0.20 Sales?

MGT 101

suppose sales 100 - CGS 80 GP 20 = GP is 25% of CGS and 20% of Sales at the same time Sales - CGS (80% of sales) = GP while Operating Profit 50,000 + Admin Exp (15% of Sales) = GP
Make equation = Sales - 0.80 Sales = 50,000 + 0.15 Sales
Solve: 0.20 Sales - 0.15 Sales = 50,000
0.05 Sales = 50,000 so Sales = 50,000 / 0.05 that is Rs. 1,000,000
Now solve Sales 1000,000 - CGS = GP - Admin Exp 150,000 = Operating Profit = 50,000
CGS = Sales 1000,000 - GP 200,000 = 800,000
Closing stock = Opening 500,000 + Purchase 700,000 - CGS 800,000 = 400,000

CGS 80% kaise nikala kindly guide.

Topic to be tested:

Financial Statements
Learning Objectives:

To determine various items of financial statements from incomplete set of information and application of accounting principles.
Discussion Scenario:

It is supposed that you are an accountant of a business. You have limited information because some financial data has been lost due to fire. Available information for the period is:

Gross profit is 25% of cost of goods sold
Operating profit Rs. 50,000
Selling and administration expense are 15% of sales
Financial expenses are 1% of sales
Opening stock Rs. 500,000
Purchases Rs. 700,000

Being a business graduate, you know the fundamentals of accountancy. You are required to determine the amount of sales and value of closing stock for the period. In addition to it, which basic principle/concept of accounting is applied to deduct value of closing stock from cost of goods available for sale for reporting? Also discuss the main logic for this deduction?

Note: Provide your answer precisely and it must not exceed 125 words.

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