- 8 Marks
FA – L1 – Q92 – Preparation of accounts from incomplete records
Calculate sales for Iridescent's business for 20X9 using incomplete records and a 40% mark-up
Question
Iridescent is a sole trader. She does not keep a full set of accounting records but does keep some records of transactions and documents. She has asked you to prepare her accounts for the year ended 31 December 20X9.
You have been given a list of the assets and liabilities of the business at the start and end of the year.
Assets and liabilities
| At 1 Jan 20X9 | At 31 Dec 20X9 | |
|---|---|---|
| GH₵000 | GH₵000 | |
| Trade receivables | 5,500 | 6,100 |
| Trade payables | 2,800 | 3,500 |
| Inventory | 10,400 | ? |
Iridescent has no idea what her inventory value was at 31 December as she did not count or value her inventory at the year end.
She has also given you a summary of her bank statements for the year.
Summary of bank statements
| Receipts | Payments | ||
|---|---|---|---|
| GH₵000 | GH₵000 | ||
| 1 Jan | Balance b/d | 1,620 | To suppliers |
| Bankings | 65,400 | For expenses | |
| Living expenses | |||
| 31 Dec Balance c/d |
You have also been able to gather the following information from Iridescent:
i) Iridescent banks her takings from the till each week but before doing so pays GH₵50,000 to her employees and takes GH₵30,000 herself. The business operates for 50 weeks each year.
ii) The till always has a cash float of GH₵100,000.
iii) The sales of the business are both cash and credit sales and are all made at a mark-up of 40%.
Required:
(a) Calculate sales for the year.
(b) Calculate the value of the closing inventory at 31 December 20X9.
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