MGT101
GDB 1 Solution Fall 2022: Today we are sharing with you the management subject gdb
mgt101 please before creating your assignment or gdb file read all the
instructions carefully and follow the rules. To understand the basic concepts
of accounting and the application of Double Entry Bookkeeping System.
GDB Question:
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:
- Cost of goods sold.
- Owners equity at the end of the year.
- 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).
- 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.
Solution
Cost
of Goods Sold
|
Opening
Inventory |
7,000 |
|
Purchases (Add) |
90,000 |
|
Carriage
Inward (Add) |
5,000 |
|
Closing
Inventory (Less) |
8,000 |
|
Cost of Goods Sold |
94,000 |
Owner
Equity
|
Opening
Owner's equity |
100,000 |
|
Additional
Capital (Add) |
8,000 |
|
Retained Earnings (Add) |
72,000 |
|
Drawings (Less) |
3,000 |
|
Owner
Equity |
177,000 |
Effect of sale of Inventory on Assets: The assets
that we have decreased, this is
the case given to us above, according to the calculation that we have sold out
the inventory. Sold some items of Inventory Rs, 2000 in cash and which was
purchased for Rs, 2500.
Effect of sale of Inventory on Equity: Our equity
will also decrease because our items were worth 2500 and we sold them
for 2000, so there has been a loss of Rs, 500. If we have profit, then we add
it in the form of retained earnings, if we have loss, then we show it and the
loss is minus from owner's equity.
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