1
Yuan Ltd has an accounting year ended 29 February 2008. Due to staff shortages, the
stocktaking had not been undertaken until 9 March 2008 and the stock valued at this date is
£100,600. This value was also used in the company draft accounts for the year ended 29 February
2008 which showed a net profit of £249,600 and a current asset total of £300,000. The selling price
of goods is based on cost plus 25%.
During the auditing period, the following errors were discovered:
1
Sales invoices for goods dispatched to customers during the period 1–9 March 2008 amounted
to £43,838 which include carriage on sales of 5%.
2
Goods costing £14,000 were delivered to the company during the period 1–9 March 2008.
3
During the period 1–9 March 2008, returns from customers at selling price were £4,170, and
returns to suppliers amounted to £850.
4
The stock valuation of 9 March 2008 included the stock of the company’s office cleaning materials.
These materials had all been bought during February 2000 at a cost of £600.
5
Stock with a selling price of £1,650 had been borrowed by the marketing department on
27 February 2008 to be displayed at an exhibition from 28 February to 16 March. This had
helped to attract orders of £27,400 for delivery in April 2008.
6
Stocks with a selling price of £800 were sent to a customer on sale or return basis on 14 February
2008. On 23 February 2008, the customer sold half of the consignment. This credit sale had not yet
been recorded ini Yuan Ltd’s accounts for the year ended 29 February 2008. On 9 March 2008,
the remaining half of the consignment had not been returned to Yuan Ltd and the customer
had not signified its acceptance.
7
On 3 March 2008, Yuan Ltd received a batch of free samples which had been included in the
stock valuation at the list price of £20.
Required:
(a) Prepare a schedule amending the stock figure as at 29 February 2008.
(b) Calculate the revised net profit for the year ending 29 February 2008 and the correct value of
current assets at that date.