Let sales 100 Less: Gross Profit (20%) 20 Cost of Goods sold 80 When cost of goods sold is 80 then sales is 100 When cost of goods sold is Re 1 then sales = 100/80 100 X 5.50,000 When cost of goods sold is 5,50,000 then sales 80 Debtors velocity=73 days 6,87,500 Sales 6,87,500 (6) (a) Debtors 73 x 73 = 1,37,500 365 365 (b) Current Assets Inventories + Debtors + Cash Cash = Current Assets - Inventories - Debtors = 3,00,000 - 1,20,000 - 1,37,500 = 42,500, (7) Calculation of Purchases Cost of goods sold = Opening inventories + Purchases - Closing inventories Purchases = Cost of goods sold - Opening inventories + Closing inventories = 35,50,000 - 31.10,000+ * 1,20,000 = 5,60,000. (8) Calculation of Proprietory Fund, Fixed Assets Fixed Assets =0.6. It means 0.6 of Proprietory Fund has been invested in Fixed Assets and balance 0.40 has been invested Proprietary Fund in Working Capital. Working Capital = 1,80,000 (given) 1,80,000 (a) Proprietory Fund = 4,50,000 (b) Fixed Assets = 4,50,000 x 60= 2,70,000 0.40 (9) Calculation of Reserve and Surplus Proprietory Funds Share Capital + Reserve and Surplus Reserve and Surplus = Proprietory Fund - Share Capital = 4,50,000 - 4,00,000 = 2 50,000. e47 Illustration 74 You have been asked by the Management of The Wonderful Suppliers Ltd to project the Balance Sheet and a Statement of Profit and Loss on the basis of the following estimated figures and ratios, for the next financial year ending March 31, 2018: Ratio of Gross Profit 25% Inventories Turnover Ratio 5 Times Average Debt Collection Period 3 months Creditors' velocity 3 months Current Ratio Proprietory Ratio (fixed assets to capital employed) 80% Capital Gearing Ratio (Preference Shraes and Debenture to Equity Funds) 3:7 Net Profit to Issued Capital (Equity) 10% General Reserve and Profit and Loss to Issued Capital (Equity) 1:4 Preference Share Capital to Debentures 2 Cost of goods sold consists of 50% for materials and 50% for wages Gross Profit 312,50,000 Working notes should be clearly shown