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

Preparation of financial statements — practice question

Refer to Source A1 in the insert.
(a)[2]

Calculate the amount of unrealised profit included in inventory on 31 December 2019.

(b)[2]

Calculate the rate of factory profit being applied in 2019.

(c)[14]

Prepare the income statement for the year ended 31 December 2019.

(d)[5]

Advise Barry whether or not he should apply a rate of factory profit of 50%. Justify your answer.

(e)[2]

Explain where carriage on raw materials is recorded in the financial statements of a manufacturing business.

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