The following information relates to the business of Lili. Revenue $ 200 000 Inventory 1 October 2013 15500 Inventory 30 September 2014 24500 Rate of inventory turnover 8 times Net profit/sales 7% REQUIRED

1. (a)Calculate the following. cost of sales purchases percentage gross profit to sales expenses profit for the year Workings Answer[14]
2. (b)Lili's inventory of $24500 needs to be adjusted for the following. 1 5 items costing $10 each had been omitted from the inventory. 2 10 items costing $25 each were damaged and could only be sold for $15 each. 3 4 items were included in the inventory at the list price of $300 each, having been marked up by 50%. 4 1 item costing $20 was recorded in error in the inventory as $200. Complete the following table showing the effect that each adjustment will have upon the inventory valuation at 30 September 2014. The first item has been completed as an example. Adjustment Effect on inventory value Value increase decrease $ 1 ✓ 50 2 3 4[6]