The following information is available for the years 2014, 2015 and 2015:

The inventory valuations used above at the end of 2014 and at the end of 2015 were inaccurate. The inventory at 31 December 2014 had been under-valued by £1,000, whilst that at 31 December 2015 had been over-valued by £3,000.

Required:

(a) Give the corrected figures of gross profit for each of the years affected by the errors in inventory valuation.

(b) Using the figures in the revised trading accounts, calculate for each year:
(1) the percentage of gross profit to sales, and (2) the rate of turnover of inventory.

Transcribed Image Text:

2014 2015 2016 Opening inventory 10,000 20,000 28,000 Purchases 70,000 86,000 77,000 80,000 106,000 105,000 Less Closing inventory (20,000) (28,000) (23,000) Cost of sales 60,000 78,000 82,000 Sales 90,000 125,000 120,000 Gross profit 30,000 47,000 38,000