- 10 Marks
FA – Nov 2024 – L1 – Q5a – Inventory Loss and Statement of Profit or Loss
Compute inventory loss due to fire and prepare a statement of profit or loss for a sole trader.
Question
Mawulolo Enterprise is a retail business that prepares its accounts on 31 March each year. The business maintains a standard gross profit margin of 30% on sales.
The following financial information was extracted from its records as at 31 March 2024:
| Item | GH¢ |
|---|---|
| Inventory at 1 April 2023 | 254,000 |
| Operating Expenses | 378,000 |
| Finance Cost | 58,000 |
| Purchases | 1,306,000 |
| Sales | 1,900,000 |
| Inventory in good standing at 31 March 2024 | 192,000 |
On 31 March 2024, a fire outbreak in the warehouse destroyed some of the inventory records and goods.
The tax charge for the year is estimated at GH¢30,000.
Required:
i)Calculate the amount of inventory lost.
ii) Prepare the Statement of Profit or Loss for the year ended 31 March 2024
Find Related Questions by Tags, levels, etc.
- Tags: Cost of Sales, Financial Adjustments, Fire Loss, Gross Profit, Inventory Valuation, Net Profit
- Level: Level 1
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