The following are the trading of Zainab Trading Co. Ltd, for the year ended 31st...
The following are the trading of Zainab Trading Co. Ltd, for the year ended 31st December, 1986.
Creditors 20,000 Premises 20,000 Machinery 20,000 cash 20000 Debtors 30,000 stock 50,000 cost of goods sold 100,000 sales 200,000 plant 30,000 Rent 10,000
From the above, calculate the (a) Fixed assets; (b) working capital; (c) gross profit (d) net profit.
Explanation
(a) Fixed Assets: Premises 20,000 Machinery 20,000 Plant 30,000 #70,000
(b) Working Capital =Current Assets - Current Liabilities
Current Assets: Cash 20,000 Debtors 30,000 Stock 50,000 100,000
Current Liabilities: Creditors 20,000
Working Capital = CA - CL = 100,000 - 20,000 = 80,000.
(c) Gross Profit = Sales - Cost of goods sold 200,000 - 100,000 = #100,000
(d) Net Profit = Gross Profit - Expenses (Rent) = 100,000 - 10,000 = #90,000