During the month ended 31 October 2019, your business made a gross profit of Sh 60,000 which represented a mark-up of 50 per cent. Opening stock was Sh 12,000 and closing stock was Sh 18,000. Determine the value of: (Write your answers with commas e.g. 10,000 not 10000) Cost of goods sold = Sh Cost of goods available for sales = Sh Value of goods purchased = Sh Total sales = Sh
Question
During the month ended 31 October 2019, your business made a gross profit of Sh 60,000 which represented a mark-up of 50 per cent. Opening stock was Sh 12,000 and closing stock was Sh 18,000.
Determine the value of: (Write your answers with commas e.g. 10,000 not 10000)
Cost of goods sold = Sh
Cost of goods available for sales = Sh
Value of goods purchased = Sh
Total sales = Sh
Solution
Sure, let's break it down:
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Cost of Goods Sold (COGS): The gross profit is the difference between the total sales and the cost of goods sold. If the gross profit is Sh 60,000 and this represents a 50% markup, then the cost of goods sold is 100% - 50% = 50% of the total sales. Therefore, the total sales is Sh 60,000 / 50% = Sh 120,000. The cost of goods sold is then Sh 120,000 - Sh 60,000 = Sh 60,000.
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Cost of Goods Available for Sale (COGAS): This is the sum of the opening stock and the cost of goods purchased. We know the opening stock is Sh 12,000. We also know that the closing stock is Sh 18,000 and the cost of goods sold is Sh 60,000. Therefore, the cost of goods purchased is Sh 60,000 + Sh 18,000 - Sh 12,000 = Sh 66,000. The cost of goods available for sale is then Sh 12,000 + Sh 66,000 = Sh 78,000.
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Value of Goods Purchased: As calculated above, this is Sh 66,000.
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Total Sales: As calculated above, this is Sh 120,000.
So, the answers are:
Cost of goods sold = Sh 60,000 Cost of goods available for sales = Sh 78,000 Value of goods purchased = Sh 66,000 Total sales = Sh 120,000
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