Tutorial question on Inventory and Financial Statements

(Past paper on FS)

1 The selling price of a product is R75(excluding VAT). The entity makes a profit of R15
after each sale. The mark-up is on selling price. Calculate the mark-up percentage

2-The following information were extracted from the accounting record of Zama Traders for
the year ended 31 December 2021:
Total sales for the period R605 000
Sale returns R5 000
Inventories-1 January 2021 R70 000
Inventory-31 December 2021 R370 000
Total purchases R750 000

Use the information above, to determine the gross profit if the company uses periodic
inventory system
A-R150 000
B-R450 000
C-R500 000
D-R600 000

3- The following information were retrieved from the books of Serena Grocery Ltd at year
ended 31 December 2021
Total sales R850 000
Cost of sales R212 500
Gross profit R637 500

Calculate the gross profit percentage

A-75%
B-80%
C-85%
D-90%
4-Accrued expense is:
A- an expense which has been paid during the current financial period, but which pertains to
a future financial period
B- income earned but not yet received
C- an expense which relates to the current financial period, but which is still unpaid at the end
of the period
D-All options are incorrect

5-A debtors who a business R500 is declared insolvent by the credit bureau. What would be
the journal entry to record this transcation?

PART B: Financial statements

The following trial balance pertains to ZARA Traders at 31 December 2020

Debit Credit
Details R R
Capital (31 December 2019) 71 520
Drawings 7 200
Mortgage bond 50 000
Trade and other payables 1 300
Land and buildings 161 700
Equipment at cost price 10 000
Accumulated depreciation on equipment 4 000
inventory 7 900
Trade and other receivables 51 120
Cash and cash equivalent (Bank) 2 620
Insurance paid in advance 1 800
Sales 330 000
Cost of sales 80 000
Rent income 10 000
Salaries 120 280
Advertising 10 060
Stock used 3 480
Telephone 760
Interest on bond 7 200
Municipal costs 6 040

Additional information:
1. Depreciation on equipment for the year ended 31 December 2020 amounted to R 2 000.
2. On 31 December 2020 salaries amounting to R 8 000 were still owing to staff.
3. Interest owing on the bond amounted to R 4 800.
4. The insurance paid in advance amounting to R 1 800 was paid on 1 December 2020 and
covered the 3 months ending 28 February 2020.

Required:
1 Prepare the statement of profit or loss and other comprehensive income of Zara Traders
for the year ended 31 December 2020
2 Prepare the statement of financial position of Zara Traders for the year ended 31
December 2020