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Incomplete Records

Joe started a camera shop on January 1, 20X1 with $5,000 in inventory and $3,000 in the bank. At the end of the year, he had $6,600 in inventory and $15,000 in the bank. He owes $3,000 to suppliers and had other cash flows. To calculate his profit for the year, we must consider his beginning balances, cash flows, and ending balances.

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274 views2 pages

Incomplete Records

Joe started a camera shop on January 1, 20X1 with $5,000 in inventory and $3,000 in the bank. At the end of the year, he had $6,600 in inventory and $15,000 in the bank. He owes $3,000 to suppliers and had other cash flows. To calculate his profit for the year, we must consider his beginning balances, cash flows, and ending balances.

Uploaded by

Okasha Ali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Question 1:

Joe starts up his camera shop on 1 January 20X1, from rented premises, with $5,000 inventory and
$3,000 in the bank. All his sales are for cash. He keeps no record of his takings.
At the end of the year he has inventory worth $6,600 and $15,000 in the bank. He owes $3,000 to
suppliers. He had paid in $5,000 he won on the lottery and drawn out $2,000 to buy himself a
motorbike. The motorbike is not used in the business. He has been taking drawings of $100 per week.
What is his profit at 31 December 20X1?

Question 2:
Joe Han's business had trade receivables of $1,750 on 1 April 20X4 and
trade receivables of $3,140 on 31 March 20X5. If payments received from receivables during the year to
31 March 20X5 were $28,490, and if there are no bad debts, calculate credit sales for the period.

Question 3:
Joe Han's business had trade payables of $3,728 on 1 October 20X5 and
trade payables of $2,645 on 30 September 20X6. If payments to trade payables during the year to
30 September 20X6 were $31,479, then calculate purchases during the year.

Question 4:
Mr Harmon does not keep full accounting records, but the following information is available in respect of
his accounting year ended 31 December 20X9.
$
Cash purchases in year 3,900
Cash paid for goods supplied on credit 27,850
Trade payables at 1 January 20X9 970
Trade payables at 31 December 20X9 720
In his trading account for 20X9, what will be Harmon's figure for purchases?

Question 5:
Harry has budgeted sales for the coming year of $175,000. He achieves a constant mark-up of 40% on
cost. He plans to reduce his inventory level by $13,000 over the year.
What will Harry's purchases be for the year?

Question 6:
Using the same facts as in the question above, calculate Harry's purchases for the year if he achieves a
constant margin of 40% on sales.
Question 7:
Joe Han's business on 1 July 20X6 has a value of $8,400, and an inventory count at 30 June 20X7
showed inventory to be valued at $9,350. Sales for the year to 30 June 20X7 are $80,000, and the
business makes a mark-up of 331/3% on cost for all the items that it sells. What were the purchases
during the year?

Question 8:
Orlean Flames is a shop which sells fashion clothes. On 1 January 20X5, it had trade inventory which
cost $7,345. During the 9 months to 30 September 20X5, the business purchased goods from suppliers
costing $106,420. Sales during the same period were $154,000. The shop makes a gross profit of 40%
on cost for everything it sells. On 30 September 20X5, there was a fire in the shop which destroyed most
of the inventory in it. Only a small amount of inventory, known to have cost $350, was undamaged and
still fit for sale.
How much of the inventory was lost in the fire?

Question 9:
Beau Gullard runs a jewellery shop on the high street. On 1 January 20X9, his trade inventory, at cost,
amounted to $4,700 and his trade payables were $3,950.
During the 6 months to 30 June 20X9, sales were $42,000. Beau Gullard makes a gross profit of 33 1/3%
on the sales value of everything he sells.
On 30 June, there was a burglary at the shop, and all the inventory was stolen.
In trying to establish how much inventory had been taken, Beau Gullard was only able to say that:

(a) He knew from his bank statements that he had paid $28,400 to trade account payables in the 6-month
period to 30 June 20X9.

(b) He currently had payables due of $5,550.

Required
(a) Calculate the amount of inventory stolen.
(b) Calculate gross profit for the 6 months to 30 June 20X9.

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