Advanced Financial Accounting FIN-611 Mian Ahmad Farhan Lecture-5 Single Entry & Accounting for Non- Profit organizations

Cost Structure Markup% of gross profit on cost of goods sold Margin % of gross profit on sales

Markup Sales xxx125% Less Costxxx100% Gross profitxxx 25%

Margin Sales xxx100% Less Costxxx75% Gross profitxxx 25%

Debtor’s Account Opening balance Credit sales xxx Cash received from debtors Closing balance ???? xxx

Question Cash Book Cash sales500 ReceiptAmountPaymentAmount

Question Opening balance Credit sales 300 ? Cash received from debtors Closing balance 1,200 ? Cost of goods sold is Rs. 2,000 Gross Profit is 20% of cost of goods sold Debtors Account

Solution Cost of goods sold (COGS) = Rs. 2,000 Gross profit (GP) = 2,000 x 20% = 400 Sales = COGS + GP = 2, = 2,400 Sales = Cash sales + Credit sales Credit sales = Sales – Cash sales = 2,400 – 500 = 1,900

Solution Opening balance Credit sales 300 1,900 Cash received from debtors Closing balance 1,200 1,000 2,200

Question Cost of goods sold is Rs. 2,250 Gross Profit is 25% of sales Find Sales and Gross profit. Solution Sales ? 100% Less COGS 2,250 75% Gross profit ? 25%

Formula Given information in absolute terms x % of required information % of given information Sales = 2,250 / 75 x 100 = 3,000 Gross profit = 3,000 x 25% = 750

Question Sales is Rs. 4,000 Gross Profit is 25% of cost Find Cost and Gross profit

Formula Given information in absolute terms x % of required information % of given information Gross profit = 4,000 / 125 x 25 = 800 GP = Sales - COGS COGS = Sales – GP = 4,000 – 800 = 3,200

Question Cash paid to creditors Closing balance ? 800 Opening balance Credit Purchase 500 ? Creditor’s Account

Question COGS = 3,200 Opening Stock = 400 Closing stock = 800 Cash Purchases = 1,600 Find the value of Credit purchases and Cash paid to creditors. Solution COGS = Opening stock + Purchases – Closing stock Purchases = COGS + Closing stock –opening stock = 3, = 3,600 Purchases = Cash purchase + Credit purchase Credit purchase = Purchases – Cash purchase = 3,600 -1,600 = 2,000

Solution Cash paid to creditors (Balancing figure) Closing balance 1, Opening balance Credit Purchase 500 2,000 2,500 Creditor’s Account

COGS = Opening stock + Purchases – Closing stock Purchases = COGS + Closing stock – Opening stock Opening stock = COGS - Purchases + Closing stock Closing stock = COGS - Purchases - Opening stock

Accounting for Non Profit organizations

Resources = Sources Assets = Accumulated fund + Liabilities

Division of Non-profit organizations Small scale organizations Receipt & Payment A/c Medium scale organizations Cash book Statement of affairs Year end adjustments Large scale organizations