Confusion around 3b
I hope everyone understands the solutions were not prepared by myself. However, I will offer a solution through MY OWN INTERPRETATION of this highly ambiguous question:
Sales returns amount to 2600 as 5% x 0.4 x 130,000 = 2600 (Sales Returns are calculated on credit sales only in the scope of VCE)
Cost of sales is 70% of sales, we have generated TOTAL sales of 130,000, with Sales Return of 2600, so NET sales is 127,400. Therefore, NET cost of goods sold would be 127400*0.7 = 89180 (because cost of sales is 70% of sales).
BUT the stock control ledger has TWO cost of sales entries. The cost of sales entry on the debit side to record the Sales Return would be 2600 x 0.7 = 1820. Cost of sales entry on the CREDIT side of Stock control would be 91000, as 91000-1820 gives NET cost of sales of 89180.
Therefore, the cost of sales Ledger would look like this:
Cost of Sales
From total stock sold (130,000x0.7)------> DR Stock control 91000 CR Stock control 1820 <----- from Sales Return
CR Profit and loss summary 89180
91000 91000
Stock Control Ledger:
Stock Control
10% stock pucrhased on cash ------> DR Bank 13248 CR Stock Loss 2300
90% stock purchased on credit ----> DR Creditors Control 119232 CR Cost of Sales 91000
Cost price of sales return------> DR Cost of sales 1820 CR Balance 41000
134300 134300
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