MGT101 ASSIGNMENT 1 SOLUTION SPRING 2021
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Assignment Marks: 12
Due Date: 26-July-2021
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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.
ADDITIONAL INFORMATION:
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
Add net loss = 75,000
Equity = 175,000
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