Question
QUESTION 3 30 MARKS The following are the final accounts of Barsha Minimart for the year ended 31 December 2020. Barsha Minimart Income statement for
QUESTION 3 30 MARKS
The following are the final accounts of Barsha Minimart for the year ended 31 December 2020.
Barsha Minimart
Income statement for the year ended 30 June 2020
Sales
$ $
300 000
Less: Sales return (9 600)
Net sales 290 400
Less:
Opening inventories 75 600
Add: Purchases 104 400
Less: Closing inventories
180 000
(36 000)
Cost of goods sold 144 000
Gross profit 146 800
Add: Revenue 18 000
Less: Expenses (136 200)
Net profit 28 600
Barsha Minimart
Balance sheet as at 30 June 2020
Non-current assets
$ $
220 000
Current assets
Inventories 36 000
Accounts receivable 21 400
Cash 9 000
Less: Current liabilities
66 400
(31 400) 35 000
255 000
Financed by:
Capital 226 400
Add: Net profit 28 600 255 000
255 000
Note: Assume all the sales were made on credit. The balance for account receivable at 30 June 2019
was $ 29 400
The industry average for the financial ratios are:
Gross Profit Margin = 40.0%
Net profit margin = 15.0%
Inventories turnover ratio = 4.5 times
Acid test ratio/Quick ratio = 1.30:1.00
Account receivable collection period = 25 days
ACCY111 Accounting Fundamentals in Society Page 10 of 12
Required:
A. Compute the following ratios.
a) Gross Profit Margin
b) Net profit margin
c) Inventories turnover ratio
d) Quick ratio
e) Account receivable collection period
(15 marks)
B. Interpret the calculated financial ratios and evaluate the performance of Barsha Minimart as
compared to the industry average.
(15 marks)
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