Question

Thuto Computers (Pty) Ltd has a store at the local shopping complex and was hit by a severe flood on 27 June 20.9. The flood destroyed most of the inventory in the storeroom.

The following information was taken from the trail balance for the reporting period ended 31 December 20.8:

Cash sales 700 000
Credit sales 384 000
Cash purchases 364 000
Credit purchases 186 000
Inventories (1 January 20.8) 600 000

Inventories (31 December 20.8) 350 000

Returns (in) 44 000

Returns (out) 100 000

Sales expenses 50 000

Freight (in) 80 000

Freight (out) 60 000

The following information was taken from the trail balance for the period 1 January 20.9 up to the date of the flood:

Net sales 425 000
Net purchases 78 880

Sales expenses 48 500

ADDITIONAL INFORMATION:

1. The percentage gross profit on turnover remained constant over the past years.

2. Personnel from the emergency services recovered inventories with no flood damage that was marked at a selling price of R39 600.

3. During March 20.9, a sale was held and all goods were sold at 20% discount on the selling price. The total receipts during this sale amounted to R142 000 and is included in the sales figure of R425 000.

4. Thuto Computers (Pty) Ltd is registered for VAT purposes. VAT is calculated at 14%.

Required

1. Total sales for the year ended 31 December 20.8 as per the Statement of Profit and Loss of Thuto Computers (Pty) Ltd amounted to?

2. Total cost of sales for the year ended 31 December 20.8 as per the Statement of Profit and Loss of Thuto Computers (Pty) Ltd amounted to?

3. If the inventories of Thuto Computers (Pty) Ltd were insured for R80 000 (excl. VAT), what would the amount of the claim be that Thuto Computers (Pty) Ltd will receive from as compensation for the loss?

4. The gross profit percentage of Thuto Computers (Pty) Ltd for the year ended 31 December 20.8 amounted to?

Answer 1

1. Total sales for the year ended 31 December 20.8
Cash Sale	R                7,00,000
Credit Sales	R                3,84,000
Less: Return (In)	R                    44,000
Total Sales	R              10,40,000

2. Total cost of sales for the year ended 31 December 20.8
	Amount	Amount
Cost of Goods Sold
Inventory (1 January ,20.8)		R     6,00,000
Purchase
Cash Purchase	R                           3,64,000
Credit Purchase	R                           1,86,000
Less: Return (Out)	R                           1,00,000
Total Purchase		R     4,50,000
Add: Freight In		R        80,000
Less: Inventory (31 December, 20.8)		R     3,50,000
Cost of Goods Sold		R     7,80,000

3	Opening Inventory	R                           3,50,000
	Add: Purchase	R                              78,880	R     4,28,880
	Sales	R                           4,25,000
	Less: Discount	R                           1,42,000
	Net Sales	R                           2,83,000
	Less: Cost of Goods Sold	(283000*100/125)	R     2,26,400
	Less:Cost Of goods Sold of R 1,42,000
	(R 1,42,000 / 80%)	=R,177500*100%/125%	R     1,42,000
	Cost of stock in hand at the time of Flood		R 60,480
	Since, stock in hand at time of flood is less than insured value, Full amount of loss suffered will be received as compensation.
	Claim = Loss suffered
	Claim = Stock in hand - stock recovered
	60480- (39600/125%)
	R 60480 - 31680
	R 28800

	Trading Account
Particulars	Amount	Particulars	Amount
Opening stock	R    6,00,000	Sales	R 10,40,000
Purchase	R    4,50,000	Closing Stock	R    3,50,000
Freight In	R       80,000
Gross Profit	R    2,60,000
	R 13,90,000		R 13,90,000
Gross Profit Margin = (Gross Profit / Sales )* 100
	=(R 2,60,000 / R 10,40,000)*100
	25.00%