Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

QUESTION 1 ( 4 4 marks ) EVE Ltd is a local shop that sells tablecloths and napkins to clients. The company is not registered

QUESTION 1
(44 marks)
EVE Ltd is a local shop that sells tablecloths and napkins to clients. The company is
not registered for VAT and all transactions are in cash.
EVE Ltd uses the perpetual inventory recording system for tablecloths and the periodic
inventory recording system for napkins. Tablecloths are measured using the First-in-
first-out basis, and napkins using the weighted average method.
All tablecloths are sold at a mark-up of 50% on the cost price and napkins at a mark-
up percentage of 30% on the selling price.
The following transactions occurred during the year ended 31 December 2024 in the
order indicated and have not been accounted for:
The results of the inventory count on 31 December 2023 indicated the following:
Tablecloths 28 units on hand (uniform unit price of R950 each)
Napkins R26487
Receive 3 tablecloths back that were consignment stock at a local caf. They
initially took these tablecloths on 10 December 2024.
In January 2024, EVE Ltd bought napkins and received a 10% discount. The price
before the discount was R14250.
EVE Ltd donated 2 tablecloths to the local coffee shop. The cost price of these
tablecloths is R950 each.
EVE Ltd sold tablecloths with a total selling price of R31350.
EVE Ltd bought napkins with a purchase price of R16870 and incurred a delivery
fee of R460.
EVE Ltd sold napkins with a selling price of R34650.EVE Ltd bought 12 tablecloths from a new supplier at a price of R900 per
tablecloth. EVE Ltd paid R1200 for the tablecloths to be delivered.
The owner took 4 tablecloths and 200 napkins to the value of R5000 to give as a
birthday gift to her sister.
EVE Ltd donated napkins, with a cost price of R7645, to the local school.
EVE Ltd bought 10 tablecloths with unique patterns for a special price of R1125
per tablecloth.
Thirteen (13) tablecloths were sold during the yearly Christmas market. These
were sold at a discount of 25%.
During the night of 25 December 2024, burglars got access to the shop and stole
some tablecloths. The tablecloths were displayed with the oldest tablecloths at the
front the burglars, therefore, stole some of the eldest tablecloths in stock. The
owners were traumatised and did not take stock count on the day.
EVE Ltd sold 4 tablecloths to local supports.
On 31 December 2024, EVE Ltd held an inventory count that indicated the
following:
Tablecloths 3 units on hand
Napkins R9902
Included in the napkins inventory at year-end are napkins with a cost price of R2
800 that were damaged during the burglary. These damaged napkins can only be
sold if they get cleaned for R700. The cleaned napkins can then be sold at a
discount of 40%.REQUIRED:
1.1 Calculate the value of the tablecloths that were stolen on 25 December 2024.
Calculate by indicating the movement in inventory from 1 January 2024-
31 December 2024.
Make use of the following format:
(27 marks)
1.2 Prepare the Cost of Sales general ledger account for ONLY the napkins for
the year ended 31 December 2024.
Please note that dates are not necessary.
Round off to the nearest Rand where applicable.
Close off account at year end.
SAICA Competency Framework Reference:

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones

10th Edition

324300980, 978-0324300987

More Books

Students also viewed these Accounting questions

Question

22, 66, 32, 43, 65, 43, 71, 34 Rank the set of data.

Answered: 1 week ago