Mr PQ has a small trading business for which the following procedures ...
Assets:
- Cash in hand
- Cash at bank
- Debtors
- Stock
- Furniture
Liabilities:
- Creditors
- Mr. PQ's personal drawings
Calculation of MRP:
- Net Credit Purchases = Credit Purchases - Purchase Returns
- Cost of Goods Available for Sale = Opening Stock + Net Purchases
- Cost of Goods Sold = Cost of Goods Available for Sale - Closing Stock
- Gross Profit = Net Sales - Cost of Goods Sold
- MRP = Cost of Goods Sold + Gross Profit
Calculation Example:
- Credit Purchases = Rs. 20,000
- Purchase Returns = Rs. 0
- Opening Stock = Rs. 5,000
- Closing Stock = Rs. 3,000
- Net Sales = Rs. 30,000
Calculation:
- Net Credit Purchases = Rs. 20,000 - 0 = Rs. 20,000
- Cost of Goods Available for Sale = Rs. 5,000 + Rs. 20,000 = Rs. 25,000
- Cost of Goods Sold = Rs. 25,000 - Rs. 3,000 = Rs. 22,000
- Gross Profit = Rs. 30,000 - Rs. 22,000 = Rs. 8,000
- MRP = Rs. 22,000 + Rs. 8,000 = Rs. 30,000
Therefore, the MRP used when the given data is Rs. 30,000.
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