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Mock exam

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  • This topic has 5 replies, 2 voices, and was last updated 9 years ago by MikeLittle.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • August 27, 2015 at 3:27 pm #268798
    wxylhyljf
    Member
    • Topics: 4
    • Replies: 7
    • ☆

    revenue $560,000, Mark-up 33.33%, closing inventory 80,000, an increase of 1005% COMPARED WITH opening invent.
    payables b/f 79,000
    c/f 160,000
    receivables b/f 62,000
    c/f 59,500

    bad debt written off 3,500

    allowance for receivables b/f 8,620
    c/f 15,200

    how much cash was paid to the suppliers?payables in the year?

    answer 379,000

    could you please show me how to get the answer? many thanks!

    August 27, 2015 at 4:27 pm #268802
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    Just confirm the percentage increase of closing inventory over opening inventory. I can’t believe that it’s 1005%!

    August 27, 2015 at 4:38 pm #268805
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    I assume that it’s a 100% increase on the value of the opening inventory so opening inventory must be 40,000

    Cost of sales is the combination of opening inventory + purchases – closing inventory

    Cost of sales itself is 75% of revenue (sales are made at a mark-up of 33.33%, so profit is 25% of revenue)

    Profit is therefore 25% of 560,000 = 140,000 so cost of sales is 420,000

    40,000 + purchases – 80,000 = 420,000 so purchases must equal 460,000

    Opening suppliers’ balance was 79,000
    Purchases was 460,000 and
    Closing suppliers’ balance was 160,000

    79,000 + 460,000 – 160,000 = cash paid

    Ok?

    August 28, 2015 at 9:58 am #268916
    wxylhyljf
    Member
    • Topics: 4
    • Replies: 7
    • ☆

    many thanks!

    August 28, 2015 at 9:59 am #268917
    wxylhyljf
    Member
    • Topics: 4
    • Replies: 7
    • ☆

    thank you!

    August 28, 2015 at 10:29 am #268921
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    You’re welcome

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    Posts
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