The following trading account for the year ended 31 December 20X8 is given to you by M Pole:

Pole says that normally he adds 20% to the cost of goods to fix the sales price. However, this year saw some arithmetical errors in these calculations.

(a) Calculate what his sales would have been if he had not made any errors.

(b) Given that his expenses remain constant at 9% of his sales, calculate his net profit for the year 20X8.

(c) Work out the rate of stock turnover for 20X8.

(d) He thinks that next year he can increase his mark-up to 25%, selling goods which will cost him £260,000. If he does not make any more errors in calculating selling prices, you are to calculate the expected gross and net profits for 20X9.

Transcribed Image Text:

Sales Less Cost of goods sold: Opening stock Add Purchases Less Closing stock Gross profit f 34,000 237,000 271,000 (41,000) £ 271,400 (230,000) 41,400