The sixth formers at the Broadway School run a tuck shop business. They began trading on 1 December 20X6 and sell two types of chocolate bar, Break and Brunch. Their starting capital was a £200 loan from the School Fund. Transactions are for cash only. Each Break costs the sixth form 16p and each Brunch costs 12p. 25% is added to the cost to determine the selling price. Transactions during December are summarised below:

December 6: Bought five boxes of Break, each containing 48 bars, and three boxes of Brunch, each containing 36 bars.

December 20: The month’s sales amounted to 200 Breaks and 90 Brunches.

Required:

(a) Record the transactions in the Cash, Purchases and Sales accounts.

(b) On December 20 (the final day of term) a physical inventory-taking showed 34 Breaks and 15 Brunches in stock. Calculate the value of closing inventory and prepare a Statement of income to report the gross profit/loss for the month of December 20X6.

(c) Explain the number of each item that should have been in stock.