A sole trader fixes her prices by adding 50 per cent to the cost of all goods purchased. On 31 October
20X3 a fire destroyed a considerable part of the inventory and all inventory records.
Her trading account for the year ended 31 October 20X3 included the following figures:
$ $
Sales 281,250
Opening inventory at cost 183,600 Purchases 249,200 432,800 Closing inventory at cost 204,600
228,200
Gross profit 53,050
Sir ! In book ans is. 281250 * 2/3 = 187500
228200 - 187500 = 40700
Sir , how 2/3 come I didn't understand. Can you please explain this and the concept of qno ?
Ask the Tutor ACCA FA
Incomplete record
3y ago#1If they add 50% to the cost, then for every $100 cost they add a profit of $50 giving a selling price of $150.
Putting it the other way round, for every 150 selling price the cost is 100.
So if the sales as 281,250 then the cost of sales must be 100/150 x 281,250. (100/150 is the same as 2/3)
I do not know what you mean by 'qno' but I work through many examples like this in my free lectures on mark-ups and margins. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
A business's bank balance increased by $750,000 during its last financial year. During the same period
it issued shares of $1 million and repaid a loan note of $750,000. It purchased non-current assets for
$200,000 and charged depreciation of $100,000. Working capital (other than the bank balance)
increased by $575,000.
What was its profit for the year?
i don understand why current asset is not decreased. when purchased non-current asset?
3y ago#3This question is testing Statements of Cash Flows.
We know the change in the bank balance and therefore you can work backwards in order to calculate the chad flow generated from operations, and from there you can calculate the profit for the year :-)
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