Amadi prepared the following trial balance which is not yet totalled and contains errors. Amadi Trial balance at 31 March 2023 Debit | Credit $ | $ Fittings and equipment at cost | | 30000 Provision for depreciation of fittings and equipment | 7500 | Trade receivables | 6100 | Bank overdraft | 3106 | Trade payables | | 3485 Capital | | 20000 Sales | | 73250 Purchases | 41785 | Discount received | 1990 | Returns inwards | 3390 | Carriage inwards | 1223 | General expenses | 6430 | Rent and rates | 7380 | Drawings | 9500 | Inventory at 1 April 2022 | | 3752 Inventory at 31 March 2023 | 3965 |

Mark scheme

Marking points from the official mark scheme (May/June 2023). The mark or mark type is shown in brackets.

1. [1] Fittings and equipment at cost $30000 (Debit)
2. [1] Provision for depreciation of fittings and equipment $7500 (Credit)
3. [1] Bank overdraft $3106 (Credit)
4. [1] Discount received $1990 (Credit)
5. [1] Inventory (31 March 2023) $3965 (Debit)
6. [1] Suspense $229 (Credit) (OF)
7. [1] Total $109560 (Debit and Credit)
8. [1] Mar 31 Rent and rates (Debit) 99
9. [1] Mar 31 Drawings (Debit) 165
10. [1] Mar 31 Discount received (Debit) 165
11. [1] Mar 31 Trial balance difference (Credit) 229 (OF)
12. [1] Mar 31 General expenses (Credit) 200
13. [1] Net Revenue $69860
14. [1] Cost of goods available for sale $46760
15. [1] Cost of Sales $42795 (OF)
16. [1] Gross profit $27065 (OF)
17. [1] Workings for gross margin (27065 OF / 69860 OF) x 100 (whole formula)
18. [1] Answer 38.74% (OF)
19. [1] Businesses in the same trade would be expected to have similar gross profit margins (Max 1)
20. [1] The profit margins will vary because – Hector owns his own premises - he will not pay rent / may have repair / maintenance costs OR Amadi has to pay rent (Max 1)
21. [1] Conclusion