Jodie is a wholesaler of electrical discount goods. She buys in end-of-line and seconds quality stock from
Question:
Jodie is a wholesaler of electrical discount goods. She buys in end-of-line and seconds quality stock from manufacturers and sells it on to small electrical retailers. She has to take advantage immediately of any special offers that manufacturers make available; if she does not the manufacturers will sell to one of her competitors. Therefore, her stock levels can fluctuate substantially from one week to the next. The level of sales is not steady from month to month; it depends upon what is in stock and whether there is much demand for the items Jodie currently has in her warehouse.
At the beginning of March Jodie's stock is valued at £93 882 and comprises principally kettles, toasters and dishwashers. An unexpected surge in demand by small retail wholesalers for these items results in a high level of sales in March of £89 907. By the end of March stock has dropped to £34920. At the end of April, as the result of a special purchase of electric blankets It has gone up to £82 860 dropping back only slightly to £75 918 at the end of May. Jodie knows that she will find it difficult to dispose of most of this stock before the end of the summer.
Sales for April are £31 241 and for May, £40 270. Purchases for each of the three months are: March £3074; April £65 747; and May £18 911.
a) Draw up trading accounts for each of the three months.
b) Discuss the business and financial problems Jodie would encounter in running this type of wholesaler operation.
Keith has small shop unit in a town centre selling ready-made sandwiches and a range of cakes, bottled drinks, crisps and similar snack foods, mainly to office workers. At the end of each day any surplus sandwiches and cakes are taken round to the local shelter for the homeless. The only stock kept in the shop are supplies of drinks and snack foods in packets. Anything that has passed its sell- by date is disposed of.
The value of stock in Keith's business is low. Apart from the cost of food, drinks and similar items, his principal business expenses are rental and staff wages. He employs two full-time and a part-time member of staff. His accounting year-end is 31 December.
Information about the business expenses is as follows:
Step by Step Answer:
Business Accounting And Finance For Non Specialists
ISBN: 9781861528728
1st Edition
Authors: Catherine Gowthorpe