Financial Statements paper 2 1.5E

Deaniedani

How do i get to the answer £54,000, i just cant seem to get it. please help?

Zoynal98

Hi,

Please see workings below:

Consolidated Cost of Sales = £70,000

Additional Data:

Sale to subsidiary: £18,000
Cost of Sale: (£10,000)
Profit: £8,000
Unrealised profit = Profit x Stock left in inventories
Unrealised profit = £8,000 x 0.25 (one quarter) = £2,000

Answer: £70,000 - £18,000 + £2,000 = £54,000

• £70,000 is the Consolidated Cost of Sales
  

• You deduct the Sale to subsidiary
  

• Work out the Unrealised profit and adjust the sale figure in respect to the additional data.
  

Hope this helps.

Deaniedani

it did, thank you so much.