(b) The following data show the trading transactions of Othello Ltd for its first six months...

 

Transcribed Image Text:

(b) The following data show the trading transactions of Othello Ltd for its first six months of trading. The company operates the weighted average assumption for calculation of cost of sales. Closing inventory and the cost of sales is calculated whenever a sale is made. (1) 2011 July August September October November December 40 units at 80 units at 40 units at 20 units at 20 units at Purchases £1,000 each £ 900 each Sales 50 units at £1,500 £1,100 each £ 700 each £1,200 each 90 units at £1,700 The December sale occurred before the purchase in that month. (2) The 20 units purchased in November incurred a transport charge of £2,500 to move them to the company premises. This amount is not included in the cost of £700 per unit. (3) The 20 units purchased in December had been made to order for a customer who has now gone into liquidation. Othello Ltd can only sell these for a price of £1,000 per unit after a modification costing £150 per unit. (4) Operating expenses for the six months amounted to 10% of sales revenue. Required: Prepare the Income Statement for Othello Ltd for the six months to 31st December 2011 from the above information. (6 marks) (b) The following data show the trading transactions of Othello Ltd for its first six months of trading. The company operates the weighted average assumption for calculation of cost of sales. Closing inventory and the cost of sales is calculated whenever a sale is made. (1) 2011 July August September October November December 40 units at 80 units at 40 units at 20 units at 20 units at Purchases £1,000 each £ 900 each Sales 50 units at £1,500 £1,100 each £ 700 each £1,200 each 90 units at £1,700 The December sale occurred before the purchase in that month. (2) The 20 units purchased in November incurred a transport charge of £2,500 to move them to the company premises. This amount is not included in the cost of £700 per unit. (3) The 20 units purchased in December had been made to order for a customer who has now gone into liquidation. Othello Ltd can only sell these for a price of £1,000 per unit after a modification costing £150 per unit. (4) Operating expenses for the six months amounted to 10% of sales revenue. Required: Prepare the Income Statement for Othello Ltd for the six months to 31st December 2011 from the above information. (6 marks)

Answer rating: 100% (QA)

Answer july 40 1000 40000 aug 80 900 72000 sep 50 1500 75000 oct 40 1100 ... View the full answer