ExpertEasy1 markShort Answer
ACCA · Question 52 · Preparing basic financial statements
Scenario: AgriGrow Co trial balance at 30 Sept 20X6: Revenue $2,500,000; Purchases $1,400,000; Opening Inventory $300,000; Trade Receivables $450,000; Trade Payables $200,000; Allowance for receivables (1 Oct 20X5) $20,000; Plant & Machinery Cost $800,000; Acc. Dep (1 Oct 20X5) $320,000. Adjustments: 1. Closing inventory cost $350,000 (includes damaged items cost $50,000, NRV $30,000). 2. P&M depreciation 20% reducing balance. 3. Allowance for receivables adjusted to 5% of receivables. 4. Accrue unpaid electricity $15,000.
Calculate the Cost of Sales for the year. (Enter numbers only)
Scenario: AgriGrow Co trial balance at 30 Sept 20X6: Revenue $2,500,000; Purchases $1,400,000; Opening Inventory $300,000; Trade Receivables $450,000; Trade Payables $200,000; Allowance for receivables (1 Oct 20X5) $20,000; Plant & Machinery Cost $800,000; Acc. Dep (1 Oct 20X5) $320,000. Adjustments: 1. Closing inventory cost $350,000 (includes damaged items cost $50,000, NRV $30,000). 2. P&M depreciation 20% reducing balance. 3. Allowance for receivables adjusted to 5% of receivables. 4. Accrue unpaid electricity $15,000.
Calculate the Cost of Sales for the year. (Enter numbers only)
How to approach this question
Cost of Sales = Opening Inventory + Purchases - Closing Inventory (adjusted).
Full Answer
Cost of Sales = Opening Inventory ($300,000) + Purchases ($1,400,000) - Closing Inventory ($330,000) = $1,370,000.
Common mistakes
Using the unadjusted closing inventory of $350,000.
Practice the full ACCA FA — Financial Accounting Practice Exam 2
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