financial statements
In analyzing the financial statements of a company, a single item on the financial statements?
Question
to find out the value of work in process destroyed by fire in 2007?
. Years Sales Gross Profit Rs. Rs. 2002 40,000 11,555 2003 45,000 11,132 2004 50,000 13,452 2005 52,000 12,897 2006 60,000 17,654 ICI Ltd produced soda ash. That product uses in different industries. The property of this product is highly inflammable. The position of inventory at the beginning of year 2007 is as follows: Inventories at Jan 1, 2007 consisted of: Particulars Rs Finished goods 8,000 Work-In-Process 6,000 Materials 1,200 Total 15,200 A fire broke out in a factory at July 31, 2007 destroying all Work-in-Process inventories. After the fire, the inventories were valued as follows: Particulars Rs Materials 4,000 Finished goods 7,000 In 2007 the amount of Gross profit is based on average GP to Sale ratio of last 5 years 2002 to onward 2006. An analysis of past financial statements reflected as follows: Data for 7 months to 2007 is given as follows: Particulars Rs. Sales 20,000 Material Purchases 5,600 Direct Labor 6,000 FOH 3,000 Required: Calculate the Value of Work-In-Process destroyed by fire in 2007 Calculate the Value Gross Profit in 2007
3 weeks ago - 1 answers
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Raw material inventory beginning 1200 Add : purchases 5600 Cost of material available for use 6800 Less: raw material ending 4000 Direct raw material cost 2800 Add Direct labour cost 6000 Add FOH 3000 Total factory cost 11800 Add: W.I.P beginning 6000 Cost of good to be sold 17800 Less: W.I.P closing 4200 Cost of good manufacture 13600 Add: finished goods beginning 8000 Cost of good available for sale 21600 Less: finished goods ending 7000 Cost of good sold 14600 Calculation of GP = last five years G.P/Last five years sale X 100 Calculation of GP = 66690/ 247000 X 100 Calculation of GP = 27% of sales GP = 0.27 * 20000 GP = 5400 Cost of good sold = Sales – G.P Cost of good sold = 20000 – (20000 X 0.27) Cost of good sold =20000 – 5400 Cost of good sold =14600 WIP= 4200 G.P= 5400
by waqar a
3 weeks ago
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