Illustration of marked up by an additional amount, Financial Accounting

Assignment Help:

Illustration of marked up by an additional amount

E Limited sent goods to its branch in Thika invoiced at selling price, which was cost plus 505 of cost. On 1st July 20X2, the opening stock in Thika was Shs 3 million at selling price. Goods at selling price of SHS 16.5 million were received by Thika in the year ended 30th June 20X3.

Branch Stock A/C

20X2		Shs 000	20X3		Shs 000
Jul 1	Balance b/f	3,000	Jun 30	Cashbook/debtors	16,800
20X3
June 30	Sundry a/c	16,500
Feb 28	Branch Markup a/c	1,600	Jun 30	Balance c/d	4,300
		21,100			21,100
20X3
Jul 1	Balance b/d	4,300

Branch Mark Up A/C

20X3		Shs 000	20X2		Shs 000
Jun 30	Branch profit and loss a/c	6,400	July 1	Bal b/f	1,000
			20X3
Jun 30	Bal c/d	1,700	Jun 30	Branch stock a/c	5,500
		_____	Feb 28	Branch stock	1,600
		8,100			8,100
			20X3
			July 1	Balance b/d	1,700

Workings

Sales	Selling price	Gross profit	Cost of sales
	Sh ‘000’	Sh ‘000’	Sh ‘000’
Total sales	16,800	6,400	10,400
Marked up goods (75% X Shs 7.6m)	5,700	2,700	3,000
Normal sales	11,100	3,700	7,400

Closing stock
Total	4,300	1,700	2,600
Marked up goods	1,900	900	1,000
Normal sales	2,400	800	1,600

On 28th February 20X3, goods valued at selling price of Shs 6 million were marked-up by a further 40% of cost price. 75% of these goods were sold in the year ended 30th June 20X3. The remaining 25% were held in stock at 30th June 20X3. Sales for the year ended 30th June 20X3 amounted to Shs 16.8 million. Write up the Branch Stock and the Branch Mark-up accounts.

It can be seen that if goods are sold at a price in excess of the normal selling price, an additional profit is earned. Goods may be sold at a price in excess of the normal selling price without authority from the HO; if this occurs, the credit side of the branch stock account exceeds the debit side by the amount of the additional profits.

Related Discussions:- Illustration of marked up by an additional amount

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages