Practical Accounting Calculation Examples
Closing Stock Undervaluation Calculation
Calculate the correct value of closing stock when it is undervalued by 10%, and the current book value is Rs. 45,000.
Formula:
Revised Value = Book Value × 100 / (100 – % of Undervaluation)
Calculation:
= 45,000 × 100 / (100 – 10)
= 45,000 × 100 / 90
= Rs. 50,000
Answer: The correct value of the closing stock is Rs. 50,000.
Machinery Depreciation Calculation
Machinery worth Rs. 80,000 was purchased on 01-07-2022. Calculate the depreciation at 4% p.a. for the financial year ending on 31-03-2023.
Formula:
Depreciation = Cost of Asset × Rate × Period
Calculation:
The period from 01-07-2022 to 31-03-2023 is 9 months.
= 80,000 × (4 / 100) × (9 / 12)
= Rs. 2,400
Answer: Depreciation on Machinery for 9 months is Rs. 2,400.
Calculating Net Subscription Income
Subscription of Rs. 2,20,000 was received in the current year. Rs. 40,000 subscription is outstanding for the current year, and Rs. 20,000 is pre-received subscription in the current year. Find the net subscription amount for the current year.
Calculation:
Subscription received in current year Rs. 2,20,000
Add: Outstanding subscription (C.Y.) Rs. 40,000
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Rs. 2,60,000
Less: Pre-received subscription (C.Y.) Rs. 20,000
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Net subscription of current year Rs. 2,40,000
Answer: The net subscription amount for the current year is Rs. 2,40,000.
Goodwill Valuation: Average Profit Method
The goodwill of the firm was valued at three times the average profit of the last 5 years. The profits were: 1st year – Rs. 1,20,000; 2nd year – Rs. 80,000; 3rd year – Rs. 90,000; 4th year – Rs. 1,00,000; 5th year – Rs. 90,000 (Loss). Find the goodwill amount for the firm.
Calculation of Average Profit:
Average Profit = Total Profit of Given Years / Number of Years
= (1,20,000 + 80,000 + 90,000 + 1,00,000 – 90,000) / 5
= 3,00,000 / 5
= Rs. 60,000
Calculation of Goodwill:
Goodwill = Average Profit × Number of Years’ Purchase
= 60,000 × 3
= Rs. 1,80,000
Answer: The goodwill amount for the firm is Rs. 1,80,000.
Bill Discount Calculation (Leap Year)
Ash draws a bill for Rs. 40,260 on 15th June 2024 for 50 days. He discounted the bill with the Bank of India at the rate of 20% p.a. on the same day. Calculate the amount of discount.
(*Note: 2024 is a leap year, so the total number of days in the year is 366)
Formula:
Discount = Amount of Bill × Rate × Unexpired Days / (100 × Total Days in Year)
Calculation:
= 40,260 × 20 × 50 / (100 × 366)
= 40,260 × (20 / 100) × (50 / 366)
= Rs. 1,100
Answer: The amount of discount is Rs. 1,100.
Net Profit Ratio Calculation Example
Calculate the Net Profit Ratio given: Sales – Rs. 10,00,000, Cost of Goods Sold – Rs. 4,20,000, Indirect Expenses – Rs. 2,50,000.
Calculation Steps:
Sales Rs. 10,00,000
Less: Cost of Goods Sold Rs. 4,20,000
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Gross Profit Rs. 5,80,000
Less: Indirect Expenses Rs. 2,50,000
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Net Profit Rs. 3,30,000
Net Profit Ratio Formula:
Net Profit Ratio = (Net Profit / Sales) × 100
Calculation:
= (3,30,000 / 10,00,000) × 100
= 0.33 × 100
= 33%
Answer: The Net Profit Ratio is 33%.
Calculating Share Premium Amount
10,000 Equity shares of Rs. 10 each were issued at a 10% premium. Calculate the total amount of Share Premium.
Given:
- Number of Equity Shares = 10,000
- Face Value per Share = Rs. 10
- Premium Percentage = 10%
Formula:
Share Premium = Number of Shares × Face Value × Premium Percentage
Calculation:
= 10,000 × 10 × (10 / 100)
= 10,000 × 10 × 0.10
= Rs. 10,000
Answer: The total amount of Share Premium is Rs. 10,000.
Partnership Gain Ratio Calculation
Asha, Nimisha, and Shital are partners sharing profits and losses in the ratio of 5:4:2. Shital retires. The new ratio for Asha and Nimisha is 6:5. Calculate the Gain Ratio.
Old Ratio: Asha = 5/11, Nimisha = 4/11, Shital = 2/11
New Ratio: Asha = 6/11, Nimisha = 5/11
Formula:
Gain Ratio = New Ratio – Old Ratio
Calculations:
Asha’s Gain = 6/11 – 5/11 = 1/11
Nimisha’s Gain = 5/11 – 4/11 = 1/11
Answer: The Gain Ratio for Asha and Nimisha is 1/11 : 1/11, which simplifies to 1:1.