The following information is available about the transactions of David, a sole trader who does not keep proper accounting records:
Opening inventory $19,250
Closing inventory $21,000
Purchases $190,750
Gross profit as a percentage of sales 20%
Based on this information, what is David’s sales revenue for the year?
Answer
Margin = (sale –cost)/sale = 20%
| $ | $ | |
| Sales (balancing figure) 100% | 236,250 | |
| Opening inventory | 19,250 | |
| Purchases | 190,750 | |
| 210,000 | ||
| Closing inventory | (21,000) | |
| Cost of sales (80%) | 189,000 | |
| Gross profit ( 20/80 x 189,000) | 47,250 |