Question

Question 4.2
McDuck Traders uses the perpetual inventory system to record inventory. During the current reporting period the business added 20% to the cost price to calculate the selling price. The following transactions took place during the reporting period:
1. Bought merchandise on credit for R60 000. Railage paid cash amounted to R3 000. The railage is not included in the R60 000.
2. Sold goods for cash and deposit R43 200 into the bank account.
3. Bought goods and paid per EFT R28 000.
4. Sold goods for R22 800 on credit.
Required:
a) The relevant accounts in the general ledger of McDuck Traders.
b) The Trading statement for the reporting period.

Answer 1

a) Relevant accounts in the general ledger of McDuck Traders:
1. Inventory
2. Accounts Payable
3. Cash
4. Bank
5. Sales
6. Cost of Goods Sold

b) Trading statement for the reporting period:

Sales:
Cash Sales: R43,200
Credit Sales: R22,800
Total Sales: R66,000

Cost of Goods Sold:
Beginning Inventory: R0
Purchases: R60,000
Total Cost of Goods Available for Sale: R60,000
Ending Inventory: R28,000 (calculated as 20% of R60,000)
Cost of Goods Sold: R32,000

Gross Profit:
Total Sales: R66,000
Cost of Goods Sold: R32,000
Gross Profit: R34,000

Railage Paid: R3,000
Net Profit: R31,000