10-16-2009, 03:28 AM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by faisal_desperado</i>
<br /><blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by ausmanpk2001</i>
<br />The second question gives out a lot of information but it seems to ask only for the amount of creditors despite giving out itself that there would be 50% increase in the creditors. If my above understanding of the question's requirement is correct, than
The answer is Current creditors = Rs. 80,000
Add = Rs. 40,000 (50% of 80,0000)
Year End Creditors = Rs. 120,000
Or if you go the other way around i.e. assume that total purchases increased by 50 % than the answer is same as above
creditors period = year end creditors / purchases * 365 days
30 days = 80,000 /purchases * 365 days
purchases = 80,000 /30 * 365 days
973,334 = 120,000/60 days *356 days
For next year Purchases = Rs. 973,334 * 150% = Rs. 1,460,001
1,460,001 = year end /30 * 365 days
1,460,001 * 30 /365 = 120,000
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Dear Usman,
30 days credit period is to be replaced by 60 days, if there remain 80,000 per 30 days as outstanding against creditor then after 50% increase, creditors will be 120,000, regardless of purchases.
If, for 30 days, creditor are 120,000 then for sixty days, it would be 240,000.
Also, in your above calculation, replace 30 days with 60 days, it would be 240,000 i.e. 1460001*60/365 = 240,000
Regards,
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
You are right, thankyou very much. I guess its been a long time since I've studied management accounting
<br /><blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by ausmanpk2001</i>
<br />The second question gives out a lot of information but it seems to ask only for the amount of creditors despite giving out itself that there would be 50% increase in the creditors. If my above understanding of the question's requirement is correct, than
The answer is Current creditors = Rs. 80,000
Add = Rs. 40,000 (50% of 80,0000)
Year End Creditors = Rs. 120,000
Or if you go the other way around i.e. assume that total purchases increased by 50 % than the answer is same as above
creditors period = year end creditors / purchases * 365 days
30 days = 80,000 /purchases * 365 days
purchases = 80,000 /30 * 365 days
973,334 = 120,000/60 days *356 days
For next year Purchases = Rs. 973,334 * 150% = Rs. 1,460,001
1,460,001 = year end /30 * 365 days
1,460,001 * 30 /365 = 120,000
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Dear Usman,
30 days credit period is to be replaced by 60 days, if there remain 80,000 per 30 days as outstanding against creditor then after 50% increase, creditors will be 120,000, regardless of purchases.
If, for 30 days, creditor are 120,000 then for sixty days, it would be 240,000.
Also, in your above calculation, replace 30 days with 60 days, it would be 240,000 i.e. 1460001*60/365 = 240,000
Regards,
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
You are right, thankyou very much. I guess its been a long time since I've studied management accounting
