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Zorluk: Çok zorGoods Withdrawn by Owner for Personal Use

A sole trader's draft Trading Account reported total Purchases of ₦540,000 and a Gross Profit of ₦210,000 at year-end. However, audit records revealed that the proprietor had taken goods costing ₦35,000 (with a retail selling price of ₦50,000) for personal family use, which had not yet been recorded in the accounting records. What are the corrected figures for total Purchases and Gross Profit after making the necessary adjustment?

Cevap:After making the appropriate accounting adjustment at cost price, the revised total Purchases amount is ₦【505,000】 and the revised Gross Profit is ₦【245,000】.

Cevap

The revised total Purchases amount is ₦505,000 and the revised Gross Profit is ₦245,000.
Goods taken by a sole proprietor for personal use must be recorded at cost price (₦35,000) by debiting the Drawings account and crediting the Purchases account. Crediting Purchases reduces the total Purchases balance from ₦540,000 to ₦505,000. Because Cost of Goods Sold is consequently reduced by ₦35,000, the resulting Gross Profit increases from ₦210,000 to ₦245,000.

Adım Adım Çözüm

1
Determine the correct valuation principle for inventory withdrawn by the owner.
The inventory taken for personal use must be valued at its cost price of ₦35,000, ignoring the retail selling price of ₦50,000.
Under the business entity concept and historical cost principle, the owner cannot make a profit from withdrawing goods for personal consumption.
2
Calculate the revised total Purchases figure.
Revised Purchases = ₦540,000 - ₦35,000 = ₦505,000.
Goods withdrawn for personal use are credited to the Purchases account to reduce the cost of goods available for resale.
3
Calculate the impact of the adjustment on Cost of Goods Sold and Gross Profit.
Cost of Goods Sold decreases by ₦35,000, causing Gross Profit to increase to ₦210,000 + ₦35,000 = ₦245,000.
Since Gross Profit = Sales - Cost of Goods Sold, a reduction in Cost of Goods Sold directly increases Gross Profit by the exact same amount.

Anahtar Kavram

Accounting adjustment for goods withdrawn by owner for personal use
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Konular

Goods Withdrawn by Owner for Personal Use

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