DEX Stores sells three different types of product. The business is made up of three different departments each having its own manager who is responsible for buying/selling a particular type of product. The owner determines the pricing policy and fixes the sale price.

Transactions that occurred between end of April and 3 May 20X5:

The owner has recently become concerned that the gross profit shown by the accounts does not reconcile with these percentages profit mark-ups and suspects that some of the stock may be stolen.

Required:

Calculate 

(a) The value of stock on 30 April 20X5 

(b) The extent to which the owner’s suspicions are justified.

Transcribed Image Text:

Prices are fixed at cost plus The takings during April 20X5 were The opening stock on 1 April 20X5 at cost was Inventory at cost on 3 May 20X5 Department A 40% £18,725 £4,200 £3,700 Department B 25% £11,750 £7,800 £8,100 Department C 100% £147,000 £22,500 £21,600