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- This topic has 5 replies, 3 voices, and was last updated 3 years ago by
John Moffat.
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- December 19, 2020 at 6:22 am #600273
HAI JOHN SIR
how to solve this question
The draft account of anthea co.for the year ended 31 december 20X9 includes
Revenue=80000
Gross profit=20000It was subsequently discovered that revenue had een understated by 10000 and closing inventory overstated by 5000
what is the correct gross profit percentage?
can you please say the reason also
regards
AHLAM AMINA
December 19, 2020 at 7:36 am #600287Correcting the understatement of the revenue means that the correct revenue will be higher at $90,000 and the correct profit will be higher at $30,000.
Correcting the overstatement of the closing inventory will not affect the revenue which will therefore remain at $90,000, but will mean that the cost of sales will be higher and therefore the profit will be lower by $5,000 and will therefore be $25,000.
December 19, 2020 at 1:32 pm #600310Will the new gross profit percentage be 27.78 % ?
December 19, 2020 at 5:06 pm #600341Yes, it seems so 🙂
December 20, 2020 at 5:08 am #600363yes i got it .Thank you john sir
December 20, 2020 at 10:38 am #600381You are welcome 🙂
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