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

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

3. Markup Sales xxx125% Less Costxxx100% Gross profitxxx 25%

4. Margin Sales xxx100% Less Costxxx75% Gross profitxxx 25%

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

6. Question Cash Book Cash sales500 ReceiptAmountPaymentAmount

7. 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

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

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

10. 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%

11. 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

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

13. 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

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

15. 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 = 3,200 +800 -400 = 3,600 Purchases = Cash purchase + Credit purchase Credit purchase = Purchases – Cash purchase = 3,600 -1,600 = 2,000

16. Solution Cash paid to creditors (Balancing figure) Closing balance 1,700 800 Opening balance Credit Purchase 500 2,000 2,500 Creditor’s Account

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

18. Accounting for Non Profit organizations

19. Resources = Sources Assets = Accumulated fund + Liabilities

20. 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