The following information pertains to the head office and the branch of Shakazulu Enterprises:
Branch inventory on hand at selling price:
1 January 2018: R79,400
31 December 2018: R83,170
Transactions of the branch for the year ended 31 December 2018:
Inventory transferred to the branch (selling price): R440,000
Cash sales at the branch: R392,700
Cash receipts from branch debtors: R164,484
Settlement discount granted to branch debtors: R1,796
Branch administrative expenses paid by head office: R27,864
Damaged inventory written off (at cost): R4,000
Additional information:
1. Inventory is purchased by the head office and supplied to the Durban branch at selling price, which is cost price plus 25%. During June 2018, inventory with a selling price of R3,750 was stolen at the branch. No entries have been made to record this theft. The branch held a clearance sale during April 2018. Inventory was sold at selling price less 30%. The proceeds of the sale amounted to R84,000 and were included in the cash sales amount of R392,700 above.
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FAC1601/101/3/2019
ASSIGNMENT 02-FIRST SEMESTER-QUESTION 10(continued)
QUESTION 10
Which one of the following alternatives represents the balance in the branch inventory account of Shakazulu Enterprises on 31 December 2018?
1. R1,220 surplus
2. R2,530 deficit
3. R2,530 surplus
4. R1,220 deficit
