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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
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, follow these steps:
-
Determine Total Units Available for Sale:
- Start by calculating the total number of units available for sale:
- Beginning Inventory: 110,000 units
- Purchases: 243,000 units
- Total Units Available = 110,000 + 243,000 = 353,000 units.
- Start by calculating the total number of units available for sale:
-
Calculate the Total Cost of Goods Available for Sale:
- Calculate the total cost:
- Cost of Beginning Inventory: 1,104,000
- Cost of Purchases: 872,000
- Total Cost = 1,104,000 + 872,000 = 1,976,000.
- Calculate the total cost:
-
Calculate the Weighted-Average Cost per Unit:
- Weighted-Average Cost = Total Cost / Total Units Available = 1,976,000 / 353,000 = 5.6 (approx).
-
Determine Closing Stock Units:
- Assume the closing stock is the remaining units:
- Closing Stock Units = 2,400 units.
- Assume the closing stock is the remaining units:
-
Calculate Value of Closing Stock:
- Value of Closing Stock = Closing Stock Units × Weighted-Average Cost = 2,400 × 5.6 = 13,440.
Thus, the value of the closing stock on 28 February 2021 is approximately $13,440.
Step 2
Complete the Statement of Comprehensive Income (Income Statement) for the year ended 28 February 2021.
Answer
For the Statement of Comprehensive Income:
-
Revenue/Sales:
Calculate based on given data, let’s assume sales reflect as follows:- Sales = GP × 260/160
- Sales amount = 22,182,600
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Cost of Sales:
Apply cost structure:- Cost of Sales = GP × 100/160
- Cost of Sales amount = 9,301,600
-
Calculate Gross Profit:
- Gross Profit = Sales - Cost of Sales
- Gross Profit = 22,182,600 - 9,301,600 = 14,881,000.
-
List Other Income:
- Other Income = 203,400.
-
Calculate Total Income:
- Total Income = Gross Profit + Other Income = 14,881,000 + 203,400 = 15,084,400.
-
Operating Expenses:
Sum up all operating expenses:- Director’s Fees: 4,836,000
- Audit Fees: 497,200
- Advertising: 342,440
- Total Operating Expenses = 5,675,640.
-
Calculate Operating Profit:
- Operating Profit = Total Income - Total Operating Expenses = 15,084,400 - 5,675,640 = 9,408,760.
-
Calculate Net Profit Before Tax:
- Adjust for any interest and taxes as needed for final net profit.
Step 3
Prepare the Retained Income Note on 28 February 2021.
Answer
To prepare the Retained Income Note:
-
Balance at beginning of financial year:
- Start with the given amount = 2,978,000.
-
Net Profit for the year:
- Use calculated net profit after tax = 1,342,000.
-
Buy Back of Shares:
- Reflect share buyback (if applicable) = (62,500).
-
Dividends Paid:
- Include interim and final dividends as deductions.
- Interim = 1,228,500.
-
Calculate Balance at end of financial year:
- Retained Earnings at end = Starting Balance + Net Profit - Buy Back of Shares - Dividends = 2,978,000 + 1,342,000 - 62,500 - 1,228,500 = 2,357,000.
Thus, the final balance of retained income on 28 February 2021 is $2,357,000.