Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

Aleksander trades in goods and his financial year ends on 30 June. He purchases containers of sunflower seeds for $100 per container. He sends some of them to his agent Benji in northern Europe and pays Benji commission equal to $10\%$ of sales value.
(a(i))[2]

Prepare the goods on consignment account in Aleksander's books for the 3 months ended 30 June 2017.

(a(ii))[12]

Prepare the consignment account in Aleksander's books for the 3 months ended 30 June 2017.

(a(iii))[5]

Prepare the Benji account in Aleksander's books for the 3 months ended 30 June 2017.

(b)[4]

Explain how Aleksander could respond to this rise in cost. Support your answer by looking at the effect on profit per container.

(c)[2]

State why an advertising campaign financed by an agent would not be included when valuing inventory.

Worked solution & mark scheme

This 25-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Income statement shows $20\,000$” …

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