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Incomplete Records

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Incomplete Records

  • This topic has 3 replies, 3 voices, and was last updated 5 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 26, 2015 at 10:10 am #278999
    Benny
    Member
    • Topics: 5
    • Replies: 2
    • ☆

    Hi Sir

    I have this question from BPP text. Would need some explaination.

    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
    Using this information, what inventory loss has occurred?
    A $61,050
    B $87,575
    C $40,700
    D $110,850

    The ans is C

    I couldn’t understand how they calculated out the ans. Could you kindly explain pls?

    October 26, 2015 at 2:00 pm #279044
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    The profit is 50% of the cost and therefore the sales are 150% of cost.

    Therefore the cost of sales in this example is 100/150 x 281,250 = 187,500.

    The opening inventory plus purchases are 183,600 + 249,200 = 432,800.
    Therefore the closing inventory should be 432800 – 187500 = 245300.

    However it is only 204600. Therefore the inventory lost = 245300 – 204600 = $40,700.

    January 5, 2018 at 12:04 pm #427345
    danny969
    Member
    • Topics: 24
    • Replies: 31
    • ☆☆

    Thanks

    January 5, 2018 at 5:51 pm #427369
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    You are welcome.

    But do watch my free lectures, because I work through examples like this one. The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well 🙂

  • Author
    Posts
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