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Question Number 110.
Basil required 60% of Parsley on 1 March 2019. In September 2019, Basil sold $46,000 worth of goods to Parsley. Basil applies a 30% mark up to all its sales. 25% of these goods were still held in inventory by Parsley at the end of the year.
An extract from the draft statement of Profit or Loss of Basil and Parsley at 31 December 2019 is :
Basil Parsley
$ $Revenue 955,000 421,500
Cost of Sale. (407,300) (214,600)
Gross Profit 547,700. 206,900All revenue and costs arise evenly throughout the year.
What will be shown as gross profit in the consolidated statement of profit or loss of Basil for the year ended 31 December 2019 ?
Q. 110
$ 717,463
$
Basil. 547,700
+Parsley (206,900*10/12). 172,417
– PURP((46,000*30/130)*25%). (2,654)
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717,463Sir why do we not deduct 46000 from revenue and deduct 46000 from COS ?
The question asks “What figure will be shown as gross profit?”
If you deduct $46,000 from Revenue and from Cost of Sales, the figure for gross profit will still be $717,463
Besides, how do you know that they haven’t deducted $46,000 from both Revenue and from Cost of Sales?
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