Question 2

1. On 1 February 2019, Kelebogile acquired 80% of the equity share capital of Elizabeth.

Extracts of their statements of profit or loss for the year ended 31 October 2019 are:

Kelebogile Elizabeth

P000 P000

Revenue 646,000 380,000

Cost of sales (512,000) (260,000)

Sales from Kelebogile to Elizabeth throughout the year to 31 October 2019 had consistently been P8,000,000 per month.

Kelebogile made a mark-up on cost of 25% on these sales.

Elizabeth had P15,000,000 of these goods in inventory as at 31 October 2019.

Required: To show the calculation for the cost of sales in Kelebogiles consolidated statement of profit or loss for the year ended 31 October 2019? (10)