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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. REQUIRED: 2.1 Refer to Additional Information B(f). Calculate the ... 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, we need to determine the total cost of goods available for sale and the total units available for sale.
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Calculate Total Cost of Goods Available for Sale:
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Opening Stock: 1,105,000
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Purchases: 2,433,000
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Add: Purchase Expenses: 572,000
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Total Cost = Opening Stock + Purchases + Purchase Expenses
Total Cost = $1,105,000 + 2,433,000 + 572,000 = 4,110,000
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Calculate Total Units Available for Sale:
- Opening Stock Units: 2,400
- Add: Purchases Units: 4,000
- Add: Additional Units: 11,500
- Total Units = Opening Stock Units + Purchases Units + Additional Units
Total Units = 2,400 + 4,000 + 11,500 = 17,900
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Calculate Weighted Average Cost per Unit:
Weighted Average Cost per Unit = Total Cost / Total Units
Weighted Average Cost per Unit = 4,110,000 / 17,900 ≈ 229,000
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Calculate Closing Stock:
- Closing Stock Units: 2,400
- Closing Stock Value = Closing Stock Units x Weighted Average Cost per Unit
Closing Stock Value = 2,400 x 229 = 550,800
The value of the closing stock on 28 February 2021 is approximately $550,800.
Step 2
Complete the Statement of Comprehensive Income (Income Statement) for the year ended 28 February 2021.
Answer
The Statement of Comprehensive Income for the year ended 28 February 2021 can be structured as follows:
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Sales:
- Total Sales = 24,182,600
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Cost of Sales:
- Opening Stock: 1,105,000
- Add: Purchases (Cost): 2,433,000
- Less: Closing Stock: 550,800
- Cost of Sales = Opening Stock + Purchases - Closing Stock
Cost of Sales = 1,105,000 + 2,433,000 - 550,800 = 2,987,200
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Gross Profit:
- Gross Profit = Sales - Cost of Sales
Gross Profit = 24,182,600 - 2,987,200 = 21,195,400
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Operating Expenses:
- Audit Fees: 497,200
- Advertising: 432,440
- Sundry Expenses: 88,000
- Total Operating Expenses = Sum of all Operating Expenses
Total Operating Expenses = 497,200 + 432,440 + 88,000 = 1,017,640
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Operating Profit:
- Operating Profit = Gross Profit - Total Operating Expenses
Operating Profit = 21,195,400 - 1,017,640 = 20,177,760
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Profit Before Tax:
- Profit before Tax = Operating Profit + Other Income (Interest Income, etc.)
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Net Profit After Tax:
- Net Profit = Profit Before Tax - Income Tax
Final calculations yield a Net Profit After Tax of $1,342,000.
Step 3
Prepare the Retained Income Note on 28 February 2021.
Answer
The Retained Income Note for the year ended 28 February 2021 should present the following:
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Balance at beginning of financial year:
- Total: 2,978,000
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Net Profit for the year:
- Total: 1,342,000
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Buy back of shares:
- Total: (62,500)
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Dividends Declared:
- Various types, including interim and final dividends totaling: 1,228,500
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Balance at end of financial year:
- Total: 2,357,000
This retained income structure lists the beginning balance, adds the net profit, accounts for any reductions from buy-backs and dividends, culminating in the final retained income figure.