The following trading account is extracted from the statement of profit or loss for the year ending
Question:
The following trading account is extracted from the statement of profit or loss for the year ending 31 December 2015 and is given to you by the owner of the business, S. Vane:
Vane says that he normally adds 25% to the cost of goods to fix the sales price. However, this year there were some arithmetical errors in these calculations.
(a) Calculate what his sales would have been if he had not made any errors.
(b) Given that his expenses remain constant at 8% of his sales, calculate his net profit for the year 2015.
(c) Work out the rate of inventory turnover for 2015.
(d) He thinks that next year he can increase his mark-up to 30%, selling goods which will cost him £280,000. If he does not make any more errors in calculating selling prices, you are to calculate the expected gross and net profits for 2016.
Step by Step Answer:
Frank Woods Business Accounting Volume 1
ISBN: 9781292084664
13th Edition
Authors: Alan Sangster, Frank Wood