MGT101 GDB Fall 2022 Solution
ABC Brothers have an opening inventory of Rs.7,000 and a closing inventory of Rs.8,000. Purchases for the year were Rs.90,000, carriage inward was Rs.5,000 and carriage outward was Rs.4,500. ABC Brothers sold some items of inventory for Rs.2,000 in cash during the year, which was purchased for Rs.2,500. The owners of business brought an additional capital of Rs.8,000 during the year and withdrew goods of Rs. 3,000 from the business for his private use. At the end of the year profit reported in income statement is Rs. 72,000. Owner’s equity at the beginning of the period was Rs.100,000.
What will
be the:
1.
Cost of goods sold.
2.
Owners equity at the end of the
year.
3.
Effect of sale of inventory on
assets (Just mention the effect as:
Increase in asset by Rs.??? or Decrease in asset by Rs.??? or No Effect on
asset).
4. Effect of sale of inventory on owners equity of business
(Just mention the effect as: Increase in owners equity by Rs.??? or Decrease in
owners equity by Rs.??? or No Effect on owners equity). Note: only the effect of sale of inventory on owners equity
is required in this part. Effect of given net profit of Rs. 72,000 on owners
equity is not required.
1)
Cost of good sold
Opening inventory 70000
Purchases
90,000
Carriage inward
5,000
Closing inventory
(8,000)
Cost of good
sold
94,000
2) Owners equity at
the end of the year.
Opening owner equity 100,000
Additional capital 8,000
Retained earning 72,000
Drawing
(3,000)
Owner equity 177,000
Effect of Sale
Inventory of Asset Decreases
Effect of Sale Inventory of Equity Decreases
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