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Luthuli electronics ltd. commenced business

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Luthuli Electronics Ltd. commenced business on 1 April 1999, selling television sets both on a cash basis and by instalments.  Hire purchase sales require a deposit of one-third of the cash selling price with the balance payable in 18 equal monthly instalments.  No additional charge is made for this service.  At the end of each financial year the firm takes credit for the profit instalment sales only in respect of the proportion represented by deposit and instalments actually reserved.

The following transactions took place during the two yeas ended 31 March 2000 and 2001:

 

2000

Shs.

2001

Shs.

Cash sales

Instalment sales

New TV sets purchased

Cash collections or instalment contracts:

Initial deposit

Monthly instalments         2000 sales

                                         2001 sales

Stocks at 31 March:

New TV sets at cost

9,606,600

84,893,400

69,300,000

Shs.

28,297,800

19,323,900

 

 

16,380,000

13,131,000

119,394,000

75,119,700

Shs.

39,798,000

27,623,700

25,182,000

 

21,604,500

Required:

(i)         Trading accounts in respect of cash sales for each of the years ended 31 March 2000 and 31 March 2001 respectively.                                                                        

(ii)         Show the gross profit on hire purchase sales for each of the years ended 31 March 2000 and 31 March 2001.   

Reference no: EM13938956

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