can anybody please explain how does the loss of profit in the first problem in exercise on page 13.21 of practice manual (accounts grp1 july 2013 edition) come to Rs. 15000??
The problem is as follows:-
EXERCISES
1. Sony Ltd.’s. trading and profit and loss account for the year ended 31st December, 2010 were as follows:
Trading and Profit and Loss Account for the year ended 31.12.2010
` `
Opening stock 20,000 Sales 10,00,000
Purchases 6,50,000 Closing stock 90,000
Manufacturing expenses 1,70,000
Gross profit 2,50,000
Total of Trading A/c 10,90,000
Administrative expenses 80,000 Gross profit 2,50,000
Selling expenses 20,000
Finance charges 1,00,000
Net profit 50,000
Total of Profit & Loss A/c 2,50,000
The company had taken out a fire policy for ` 3,00,000 and a loss of profits policy for ` 1,00,000 having an
indemnity period of 6 months. A fire occurred on 1.4.2011 at the premises and the entire stock was gutted with nil
salvage value. The net quarter sales i.e. 1.4.2011 to 30.6.2011 was severely affected. The following are the other
information:
Sales during the period 1.1.2011 to 31.3.2011 2,50,000
Purchases during the period 1.1.2011 to 31.3.2011 3,00,000
Manufacturing expenses 1.1.2011 to 31.3.2011 70,000
Sales during the period 1.4.2011 to 30.6.2011 87,500
Standing charges insured 50,000
Actual expense incurred after fire 60,000
The general trend of the industry shows an increase of sales by 15% and decrease in GP by 5% due to increased
cost.
Ascertain the claim for stock and loss of profit.
(Hints: Stock destroyed by fire ` 2,60,000; and loss of profit ` 15,000)
CAclubindia
