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hello,sir
What is the accounting double entry to record the loss of inventory by fire or burglary?
A DEBIT P/L a/c CREDIT cost of sales
B DEBIT cost of sales CREDIT P/L a/c
I don’t know why credit is cost of salesThe answer is A, and the reason for crediting the cost of sales is so that it shows the correct gross profit on the goods that were actually sold.
Suppose that the inventory of joe Hans business on July 1 2006 has a value of Closing inventory of usd8400, and an inventory count at 30 June 2007 showed inventory to be valued at usd9350. Sales for the year to30 June 2007 are usd80000, and the business makes a mark-up of 33 1/3% on cost for all the items that it sells. What are the purchases during the year?
The answer are as follows:
Sales (133 1/3%) = usd 80000
Gross profit (mark up) (33 1/3%) = usd20,000.00 and cost of goods sold is usd100,000.00
My question here sir is how does 33 1/3% is equal to 20. I am using my calculator and am not getting the current answer. How does the publisher (bpp f3 page 305) got his answer please.How can the cost of the goods be higher than the sales price? 🙂
For every $3 cost, the profit is 33 1/3% x $3 = $1, and so the sales price is 3 + 1 = $4.
Putting it the other way round, for every $4 sales then the cost is $3 and the profit is $1.So if the sales are 80,000, then the profit is 1/4 x 80,000 = 20,000, and the cost is 60,000.
(and it checks – the profit of 20,000 is 33 1/3% of the cost of 60,000)I do suggest that you watch our free lectures on mark-ups and margins where I work through several examples.
Our free lectures are a complete course for Paper F3 and cover everything needed to be able to pass the exam well.
Ohh sorry it was a topographical error! ? The cost of goods sold is usd60,0000.00
And thank you so very much for your prompt reply sir, I appreciate.
I will definitely watch the lecture on mark up and profit marginKT ent. explain that he kept records of inventory sold and always achieve a 25% gross margin. how can you determined the inventory when not given
how will u determine net profit when given only percentage.e.g KT expect a net profit of 10%.
All of the questions you have asked are dealt with in our free lectures, and I cannot possibly type out all of our lectures here!
We have lectures on mark-ups and margins (which deal the your first and last question) and we have lectures on the interpretation of financial statements, which include explanation of the current ratio.Our lectures are a complete course for Paper F3 and cover everything needed to be able to pass the exam well.
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