Question

Frem the following information, calculate the items 1-9. R 50000 Paid up capital Plant and Machinery Rs. 125000 Tetal Sales (p.a.) R 5,00,000 Gross Profit 25% Annual Credit Sales s% of aet sales Current Ratio ventory Turnover Fixed Assets Turnover 2 2% of sales Sales Returns Average collection peried 73 days Bank Credit to trade credit 2 Cash to Iaventery : 15 1 Net sales 2. Credit sales 3. Gross profit 4. Inventery 5. Receivables turn over 6. Tetal current assets 7. Tetal current lBabilities 8. Fixed assets 9, Qther fised assets

Answer 1

1) Net Sales = Total Sales - Sales Returns, hence 5,00,000 - 20% of Sales i.e. 1,00,000 = 400,000

2) Credit Sales = 80% of Net Sales = 80% of 400,000 = 320,000

3) Gross Profit = 25% of 400,000 = 100,000

4) Inventory = Inventory Turnover is 4 times = Cost of Goods Sold / Average Inventory,

Cost of Goods Sold = Net Sales - Profit = 400,000 - 100,000 = 300,000

Inventory = 300,000/4 = 75,000

5) Receivable Turnover = 365/ Average Collection Period = 365/73 = 5

6) Total Current Assets = Cash + Inventory + Receivables = 5,000+75000 +64000 = 144,000

7) Total Current Liablities = Currrent Ratio = Currents Assets / Current Liabilities

Hence Current Liablities = 144,000 / 2 = 72,000

8) Fixed Assets = Plant & Machinery = 125,000