Arthur deals in bicycles. His business position at 1 October was as follows:

Having established good relations with his supplier he is able to obtain bicycles on one month’s credit. He kept notes of all transactions during October which he then summarised as follows:

(i) Purchased on credit from Mr Raleigh: 12 Model A at £54 and 10 Model B at £48. Total purchase £1,128.

(ii) Sales for cash were: 11 Model A at £81 and 8 Model B at £72.

(iii) Paid Rent by cheque £60, advertising £66 and miscellaneous expenses £12.

(iv) Drawings were £150.

Arthur’s valuation of the closing stock was £456.

Required:

(a) Prepare a statement showing the bank transactions during October.

(b) Check the closing stock valuation.

(c) Prepare a statement showing the gross profit and net profit for October and calculate the percentages of gross profit to sales and net profit to sales.

(d) Prepare a trading, profit and loss account for the month of October together with a balance sheet as at 31 October.

(e) Prepare a statement to show where the profit for the month has gone.

Transcribed Image Text:

Capital £3,369 Stock £306 (3 x Model A bicycles @ £54 and 3 x Model B @ £48) Balance at bank £3,063