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Q1/Ipass/F2
Lennox, a sole trader, has calculated that his cost of sales for the year is $144,000. His sales figure for the year includes an amount of $2,016 being the amount paid by Lennox himself into the business bank account for goods withdrawn for private use. The figure of $2,016 was calculated by adding a markup of 12% to the cost of the goods. His gross profit percentage on all other goods sold was 20% of sales.
What is the total figure of sales for the year?
Could you explain how to work this?
Firstly you have posted this in the Paper F2 forum, and this cannot be asked in Paper F2 because it is not in the syllabus.
However, it certainly could be asked in Paper F3.
The cost of the goods that he took himself is 100/112 x $2,016 (because there is a mark-up of 12%).
This needs to be removed from the cost of sales.
Now you can calculate the sales because the sales must be 100/80 x the new cost of sales (because there is a gross profit % of 20% of sales).
If you are unsure about dealing with mark-ups and margins, then our free lecture will help you.
(Our lectures are a complete course for Paper F3 and cover everything you need to be able to pass the exam well).
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