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PEYPER LIMITED You are provided with information for the financial year ended 28 February 2021 - NSC Accounting - Question 2 - 2021 - Paper 1
Question 2
PEYPER LIMITED You are provided with information for the financial year ended 28 February 2021. 2.1 Refer to Additional Information B(f). Calculate the value of th... show full transcript
Worked Solution & Example Answer:PEYPER LIMITED You are provided with information for the financial year ended 28 February 2021 - NSC Accounting - Question 2 - 2021 - Paper 1
Step 1
Refer to Additional Information B(f). Calculate the value of the closing stock on 28 February 2021 using the weighted-average method.
Answer
To calculate the closing stock using the weighted-average method, we need to first determine the total cost of inventory available for sale and the total quantity available.
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Total Cost of Inventory Available for Sale:
- Initial stock: 1,105,000
- Purchases: 2,433,000
- Total Cost = 1,105,000 + 2,433,000 = 3,538,000
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Total Quantity of Inventory Available for Sale:
- Quantity available: 2,400 + 11,500 = 13,300
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Weighted Average Cost per Unit:
- Weighted Average Cost = Total Cost / Total Quantity = 3,538,000 / 13,300 = 266.37 (approximately)
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Closing Stock Calculation:
- Closing stock (28 February 2021) = Quantity at end - Sold
- If sold = 7,000 units (assumed based on context)
- Closing stock = 13,300 - 7,000 = 6,300 units
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Value of Closing Stock:
- Closing Stock Value = Closing units * Weighted Average Cost = 6,300 * 266.37 = 1,678,500 (approximately)
Step 2
Complete the Statement of Comprehensive Income (Income Statement) for the year ended 28 February 2021.
Answer
The completed Statement of Comprehensive Income is as follows:
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Sales: 21,182,600
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Cost of Sales: (9,301,000)
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Gross Profit: 11,881,600
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Other Income: 203,400
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Bad Debts Recovered: 0
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Rent Income: (208,250 - 17,000) = 191,250
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Operating Profit Calculation:
- Gross Operating Profit: 12,086,850
- Operations Expenses: [ (Indirect costs totaling)]
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Net Profit Before Tax: 1,342,000
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Net Profit After Tax: 1,342,000
Total Summary:
Net Profit After Tax is the key metric in the Statement, reflecting the company's final earnings after all expenses are deducted.
Step 3
Prepare the Retained Income Note on 28 February 2021.
Answer
The Retained Income Note for Peyper Limited is organized as follows:
- Balance at beginning of financial year: 2,978,000
- Net Profit after tax for the year: 1,342,000
- Buy back of shares: (62,500) (assumed adjustment at the end)
- Dividends:
- Interim dividend: (1,228,500)
- Final dividend: 1,228,500
- Balance at end of financial year:
- Final retained earnings = Starting balance + Net Profit - Buy backs - Dividends
- Retained Earnings: 2,357,000