Accounting problem - please help !

1) note this shortcut down first - if the profit margin is x/y on sale price, then it is x/y-x on cost price. or, if it is is x/y on cost price, then the margin is x/x+y on sale price. this quick formula will get get you through these problems in no time.

and as far  as the explanation goes for the above shortcut, if the selling price is 120 and the profit mark up is 20% (20/100) on cost, then the cost price is obviously 100. now what is the profit margin on sales? it is nothing but the ratio of profit and selling price, so it is 20/120 or 16.6667%. note that the profit ratio is 20/100 on cost and 20/120 on sales and so, it follows the the shortcut i've mentioned.

2) sales = 2000, rate of profit on COGS = 25% = 25/100, which means profit ratio on sales = 25/125 or 20% now, 2000 - 2000*20% = COGS = 1600.

OR, you can use algebra - let cost be X, so, X+X*25% = sales => X(1+0.25) = 2000 => X= 2000/1.25 = 1600.

Originally posted by : rajiv
	1) note this shortcut down first - if the profit margin is x/y on sale price, then it is x/y-x on cost price. or, if it is is x/y on cost price, then the margin is x/x+y on sale price. this quick formula will get get you through these problems in no time. and as far  as the explanation goes for the above shortcut, if the selling price is 120 and the profit mark up is 20% (20/100) on cost, then the cost price is obviously 100. now what is the profit margin on sales? it is nothing but the ratio of profit and selling price, so it is 20/120 or 16.6667%. note that the profit ratio is 20/100 on cost and 20/120 on sales and so, it follows the the shortcut i've mentioned. 2) sales = 2000, rate of profit on COGS = 25% = 25/100, which means profit ratio on sales = 25/125 or 20% now, 2000 - 2000*20% = COGS = 1600.

Awesome! thank you for such quick reply 

Kindly help by solving the problem :

Illustration-9 on CA CPT Accounts book page no. 9.36

Last entry given as

bank a/c dr. 44750

cash in arrers a/c dr 250

    to share final call a/c

Kindly explain this entry-i think icai book showing wrong solution.

Kindly explain