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All these following questions are from BPP revision kit 2018-2019
1) 26.23
The statements “The profit mark-up was 40% on the sales price” means that $40,000*40/140 right?
But they have calculated as 40% × $40,000.
Is it because of the statement “on the sales price” making the difference?
2) 34.4(mixed bank)
They have given both the information about its useful life and the depreciation %. So should we always give 1st priority to depreciation %, to calculate depreciation?
3) Isn’t the treatment of DR. and CR. the same for receivable ledger a/c and receivable ledger control a/c( for payables too)
4) 34.14 (mixed bank)
I understood the whole working. But the only statement that i dint understand and confused me was “Inventories in hand at 31 March 20X3, valued at
cost, was $11,385 higher than the corresponding figure at 1 April 20X2.”
What does that ” $11,385 higher than the corresponding figure at 1 April 20X2″ mean?
5) 35.2 (mixed bank)
When it comes to cents, it must be 0.2c+0.3c , not 2+3
So the answer should be 1,000,000*0.5= $500000
Am I right sir?Thank You
1. What they have done is correct because the question specifically says that the profit is 40% of the sales price. (The word ‘mark-up’ on its own usually means a % of cost, but not when they specifically say that it is a % of selling price)
2. Unless we are looking at different editions of the Revision Kit, then question 34.4 does not give the useful life. However, when using reducing balance depreciation (as here) any mention of useful life is irrelevant – it is only relevant when using straight line depreciation.
3. Yes (although I don’t know why you are asking). However there is no double entry to the receivables ledger accounts.
4. It means that the value of the inventory at the end of the year is $11,385 more than the value of the inventory at the start of the year.
5. I don’t understand you. The question says that the dividends are 2 cents and 3 cents per share. It doesn’t say that they are 0.2 and 0.3 cents.
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