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Dear sir Mike,
In example 2 of chapter 10, you cancelled $4,000 out from sales and cost of sales figures. However, it is stated that “Lina sold $4,000 worth of goods at a mark up of 25% to Sigimantas”. Therefore, the selling price to S is $4,000 x 1.25 = $5,000. Isn’t this selling price of $5,000 supposed to be cancelled, instead of original cost of $4,000?
Kindly enlighten me regarding this matter.
Thanks
RithThe sale price from Lina to Sigimantas is identified as “sold $4,000 worth of goods”
Imagine that you are in a shop and you ask the price of something. The shopkeeper may say “I shall sell you these goods for $4,000” so, so far as you are concerned, the goods are worth $4,000
The fact that the shopkeeper is achieving a 25% mark-up is irrelevant – the invoice value will be shown as $4,000
That was the intention in the question
Let me ask, would you prefer the statement to read “Sigimantas bought $4,000 worth …” or even “Sigimantas bought for $4,000 goods from Lina ….”
So the mark issue will be used to remove the profit on the unsold stock not so sir.
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