ACCA F3 Incomplete Sales

The following information is available for the year ended 31 December X4 for a trader who does not keep proper accouning records:

Inventories at 1 January X4	2,000
Inventories at 31 December X4	8,000
Purchases	10,000

Gross profit percentage on sales =10.

Based on this information, what was the trader's sales figures for the year?

Suggested solutions:

Compute cost of sales

=opening inventories + purchase -closing inventory

=2,000 + 10,000 - 8,000

=4,000

Since Profit margin is 10 %, Cost of Sales will be 90 % of sales

Sales = Cost of sales / (1 - gross profit margin)

= 4,000 / 0.9

= 4,444

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