Question

Sheila runs a café. She regularly takes drawings from cash and records
them in a notebook she keeps by the till. However, the notebook has been
lost and she cannot remember how much cash drawings she took during the
year to 31 December 2019.
She estimates that she made a mark-up of 35% during the year. The cost of
sales were €100,000. Bank statements show that cash takings of €110,000
lodged during 2019. There were no trade receivables at the beginning or end
of the year. Expenses paid from cash during the year amounted to €7,000.

Answer 1

Calculation of drawings made by Sheila during the year

Cost of Sales      = €100,000

Add: Mark up @ 35% = €35,000

Revenue earned during the year = €100,000 + €35,000

                                                    = €135,000

Expenses paid during the year = €7,000

Amount deposited in Bank     = €110,000

Drawings made by Sheila during the year = €135,000 - €7,000 - €110,000

                                                            = €18,000

Important Note:

Since there is no opening or closing balance of trade receivable , all sales are made in cash.