Klassy Kicks has two departments. The following information is provided for the year ended 31 December 2013: Adults Teenagers 24 $ 30 000 Stock 1 January 2013 35 000 Purchases 185 000 105 000 Stock 31 December 2013 50 000 - 45 000 Auswe Sales 315 000 225 000 7 000 5 000 Returns Outwards 8 000 5 000 Returns Inwards Wages of assistants 28 000 50 000 The following expenses cannot be traced to any particular department: Rent 9 000 Selling expenses Electricity 48 400 6 000 Insurance 2 000 ADDITIONAL INFORMATION: (1) (2) (3) (4) (5) Floor space is taken up – Teenagers 700 sq. ft. and Adults 1 300 sq. ft. Rent is to be shared on the basis of floor space Selling expenses are to be shared in the ratio of turnover Insurance are to be shared in the ratio of turnover Electricity expense is to be shared in the ratio of turnover

Klassy Kicks has two departments. The following information is provided for the year ended 31 December 2013: Adults Teenagers 24 $ 30 000 Stock 1 January 2013 35 000 Purchases 185 000 105 000 Stock 31 December 2013 50 000 - 45 000 Auswe Sales 315 000 225 000 7 000 5 000 Returns Outwards 8 000 5 000 Returns Inwards Wages of assistants 28 000 50 000 The following expenses cannot be traced to any particular department: Rent 9 000 Selling expenses Electricity 48 400 6 000 Insurance 2 000 ADDITIONAL INFORMATION: (1) (2) (3) (4) (5) Floor space is taken up – Teenagers 700 sq. ft. and Adults 1 300 sq. ft. Rent is to be shared on the basis of floor space Selling expenses are to be shared in the ratio of turnover Insurance are to be shared in the ratio of turnover Electricity expense is to be shared in the ratio of turnover

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter8: Liabilities And Stockholders' Equity

Section: Chapter Questions

Problem 8.24E

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Capital 1 January 2019 350 000Drawings 20 000Sales (70% on credit) 950 000Gross profit 250 000Total expenses 80 000Bank favourable 26 000Net profit 74 000Trade creditors 26 000Property, plant and equipment 350 000Fixed deposit 20 000Inventory 72 000Trade Debtors 80 000Mortgage Loan 100 000 Additional InformationThe opening balance of the inventory, debtors and creditors was R50 000, R60 000 and R30 000respectively. Assume a 365 day year. Calculate the following ratios and explain what each ratio means in relation to theindustry average given in brackets. Show your calculations as marks will be awardedfor these. Round off to 2 decimal places. Q.2.1.3 Average creditors settlement period (60 days). Assume purchases are equalto cost of sales and 60% of all purchases are on credit. Q.2.2 Discuss how the solvency ratio is calculated and what is measured by this ratio. Please help with the both questions mentioned
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