# MGT101 Assignment 1 Solution 2021 - VU Answer

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MGT101 ASSIGNMENT 1 SOLUTION SPRING 2021

Assignment Marks: 12

Due Date: 26-July-2021

Read Assignment Question File Instruction Carefully

Step by Step Assignment Solution

Assignment Guideline:

Use the font style “Times New Roman” or “Arial” and font size “12”.

Document in MS-Word format.

Use only blue and black font color only.

LEARNING OBJECTIVES:

To develop an understanding of the basic concepts regarding the topics Fixed Assets and Depreciation, Provision for doubtful debts and Financial Statements.

Following information is extracted from the books of a business concern on 30th June 2021.

 Particulars Rs. Particulars Rs. Opening stock 15,000 Net sales 65,000 Plant and Machinery 100,000 Bank charges 5,453 Accumulated depreciation - Plant and Machinery 20,000 Loan given to ABC Brothers. 40,000 Cash in hand 12,800 Capital 250,000 Cost of goods sold 25,000 Loan taken from bank 50,000 Creditors 54,000 Commission received 10,000 Sundry debtors 20,000 Return inwards 5,000 Bad debts 1,575 Carriage outwards 450

In addition to the value of Plant & Machinery given in the above information, one machine costing to Rs. 30,000 was bought on 1st April 2021. Basis/Policy of charging depreciation is Time Proportionate (on the basis of use). Plant & Machinery is depreciated @ 10% per annum on straight line method.

Provision for doubtful debts is to be maintained @ 5%

Net loss for the period is Rs. 75,000.

There is no closing stock found at the end of the accounting period

Books of accounts are closed on 30th June each year.

Solution

Requirement 1:

Net Sale = 65,000

Less cost of goods sold = 25,000

Gross profit = Net Sale - Less cost of goods sold

Gross profit = 65,000 – 25,000

Gross profit = 40,000

Requirement 2:

Cost of goods sold = 25,000

Less opening stock = 15,000

Purchases = Cost of goods sold – Less opening stock

Purchases = 25,000 – 15,000

Purchases = 10,000

Requirement 3:

Cost of assets = 100,000

Less acc dep = 20,000

= 80,000

Less depreciation (100,000*10%) = 10,000

Book value of asset = 90,000

New Machine = 30,000

Less Depreciation (30,000*10%*3/12) = 750

Book Value = 29250

Requirement 4:

Debtor = 20,000

New provision (20000*5%) = 1000

Debtor = 19000

Requirement 5:

Capital = 250,000

Equity = 175,000