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Hi,
I have a question: Herbert is a carpenter, he takes a bird table from his stock. The cost of making the table is £80 and Herbert would normally achieve a mark-up of 20% on such goods.
Identify the adjustment Herbert needs to make in the accounts for tax purposes assuming he has reflected in the accounts the deduction for the cost of making the table.
Answer in the book is £96 must be added, however as it looks like he has already credited COS by £80 would the adjustment needed just be for the profit, so £16 added?
Many Thanks for you help 🙂
DavidHe must account for the “sale” of the item – ie £96 – this – after taking account of the COS £80 reflects a “profit” of £16
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