Trading account for:

The stock valuations used in the above trading accounts at the end of 20X7 and at the end of 20X8 were inaccurate. The stock at 31 December 20X7 had been under-valued by £1,000, whilst that at 31 December 20X8 had been over-valued by £3,000.

Required:

(a) Give the corrected figures of gross profit for each of the years affected by the errors in stock valuation.

(b) Using the figures in the revised trading accounts, calculate for each year:

(i) The percentage of gross profit to sales, and

(ii) The rate of turnover of stock

Transcribed Image Text:

Opening stock Purchases Less Closing stock Cost of sales Sales Gross profit 20X7 £ 10,000 70,000 80,000 (20,000) 60,000 90,000 30,000 20X8 £ 20,000 86,000 106,000 ( 28,000) 78,000 125,000 47,000 20X9 £ 28,000 77,000 105,000 ( 23,000) 82,000 120,000 38,000