1. Problems In Preparation Of Financial Statements Lecture-5 BY AHSAN RIAZ SHEIKH

2. Gross Margin Rate This ratio identify the ratio of gross margin over sales. Example:2,90,000 / 6,00,000 * 100 = 48.33% Gross Profit Sales 100

3. Gross Markup Rate This ratio identify the ratio of gross margin over cost of goods sold. Example:2,90,000 / 3,10,000 * 100 = 93.5% Gross Profit COGS 100

4. Net Margin Rate  This ratio identify the ratio of gross margin over sales.  Example:90,000 / 6,00,000 * 100 = 15% Net Profit Sales 100

5. Income Statement Ratios Expense Ratio This ratio identify the ratio of gross margin over sales. Example:50,000 / 6,00,000 * 100 = 8.33% Expense Sales 100

6. Sales = 8,00,000 Markup = 25% of cost Calculate = COGS and Gross profit margin.

7. COGS = 50,000 GP Margin = 25% of sales Calculate = Sales and gross profit margin

8. Gross profit = 40,000 GP Margin = 25% of cost Calculate = Sales and cost of goods sold

9. Gross profit = 60,000 GP Margin = 25% of sales Calculate = Sales and cost of goods sold

10. Direct Material purchased Rs. 1,00,000 Direct Labor 80,000 FOH 70,000 Increase in material inventory 10,000 Decrease in WIP inventory 5,000 Increase in finish goods inventory 30,000 Prepare cost goods sold statement

11. Total factory cost ? WIP opening 20,000 WIP closing 10,000 Finish goods opening 30,000 Finis goods closing 50,000 Cost of goods sold 1,90,000 Find total factory cost

12. Opening material inventoryRs. 10,000 Closing material inventory 5,000 Direct Labor 30,000 FOH 20,000 Total factory cost 80,000 Calculate the value of purchase (25000)