James Dean trades in clothing for the middle market. James Dean Clothing use the Periodic Inventory Method to keep records of trade goods. The following is an extract of balances from the general ledger for the year ended 28 February 2021 Extract of balances as at 28 February 2021 Revenue from sale of trade goods 735100 Rent income received from tenant 66 000 Inventory: Trade goods - balance at I March 2020 : Consumables on hand at 1 March 2020 150500 7600 Purchases 353000 Settlement discounts received 18400 Settlement discounts granted 15800 Railage inwards 36 200 Railage outwards 39100 Goods returned to suppliers 21 400 Goods returned by customers 34600 Additional information: I . Physical stock-take at 28 February 2021 determined the following: Trade goods RI 66 800 Consumables on hand R 7 940 Goods to the value R7 600 were donated to the local community organisation. An invoice for R4 500 was received on 28 February 2021 for goods transported from the supplier to James Dean Clothing. The invoice needs to be recorded. James Dean rents office space to a tenant Rental income of R18 700 was credited to the sales in error. A correction needs to be recorded. Required: Show journal entries to record adjustments for all the additional information. Prepare the trading section of the Statement of Profit or Loss and other comprehensive income for James Dean Clothing for the year ended 28 February 2021. Sales, Cost of sales and gross profit must be shown. Also show the gross profit percentage (0/0) on cost. 3.3 Briefly describe three important features of the Perpetual Inventory Method.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

James Dean trades in clothing for the middle market. James Dean Clothing use the

Periodic Inventory Method to keep records of trade goods. The following is an extract of balances from the general ledger for the year ended 28 February 2021

Extract of balances as at 28 February 2021
Revenue from sale of trade goods	735100
Rent income received from tenant	66 000
Inventory: Trade goods - balance at I March 2020 : Consumables on hand at 1 March 2020	150500 7600
Purchases	353000
Settlement discounts received	18400
Settlement discounts granted	15800
Railage inwards	36 200
Railage outwards	39100
Goods returned to suppliers	21 400
Goods returned by customers	34600

Additional information:

I . Physical stock-take at 28 February 2021 determined the following:

Trade goods	RI 66 800
Consumables on hand	R 7 940

Goods to the value R7 600 were donated to the local community organisation.
An invoice for R4 500 was received on 28 February 2021 for goods transported from the supplier to James Dean Clothing. The invoice needs to be recorded.
James Dean rents office space to a tenant Rental income of R18 700 was credited to the sales in error. A correction needs to be recorded.

Required:

Show journal entries to record adjustments for all the additional information.
Prepare the trading section of the Statement of Profit or Loss and other comprehensive income for James Dean Clothing for the year ended

28 February 2021. Sales, Cost of sales and gross profit must be shown. Also show the gross profit percentage (⁰/0) on cost.

3.3 Briefly describe three important features of the Perpetual Inventory Method.

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