FA – L1 – Q91 – Inventory

Calculate closing inventory given sales, purchases, opening inventory, and a 25% mark-up.

Question

(a) A business makes all of its sales at a mark-up of 25%. During the year sales totalled GH¢98,000 and purchases were GH¢71,000. The inventory at the start of the year was valued at GH¢10,200.

What was the value of the closing inventory at the end of the year?

(b) A business has the following assets and liabilities at the start and end of March.

	1 March	31 March
	GH¢	GH¢
Trade receivables	6,100	7,400
Trade payables	3,900	3,500

The summarised bank statements for the year showed the following figures:

Bankings for the year were GH¢78,500
Payments to suppliers for the year were GH¢49,700
The owner banks her takings from the till each month but before doing so in March she took GH¢5,000 for her own use.

What are the sales for the year?

(c) An accountant has prepared the following list of the assets and liabilities of a business, but has forgotten to enter the cash balance.

	GH¢
Trade payables	4,900
Inventory	9,300
Non-current assets	98,900
Capital	97,200
Bank loan	15,700
Receivables	16,800
Bank

What is the missing figure for ‘Bank’?

Answer

(A)

	GH¢
Sales	98,000
Cost of sales (98,000 × 100/125)	78,400
Opening inventory	10,200
Purchases	71,000
	81,200
Less: closing inventory (bal fig)	(2,800)
Cost of sales	78,400

(B)

Trade Receivables Account	GH¢		GH¢
Opening balance	6,100
Sales (bal fig)	84,800	Closing balance	7,400
	90,900	Bankings (78,500 + 5,000)	83,500
	90,900		90,900

(C)

Assets	GH¢	GH¢
Non-current assets		98,900
Inventory		9,300
Receivables		16,800
		125,000
Liabilities
Capital	97,200
Bank loan	15,700
Trade payables	4,900
		117,800
Assets exceed liabilities: therefore bank overdraft		7,200

Tags: Bankings, Drawings, Financial accounting, Sales, Trade Payables, Trade Receivables
Level: Level 1

Topic: Sales and Purchases

Uploader: Samuel Duah