The following information is from the books of Auntie Justie, who sells books, for the...
| Le | |
| sales | 220,000 |
| stock 1/1/05 | 60,000 |
| purchases | 180,000 |
| stock 31/12/05 | 70,000 |
| salaries and wages | 8,000 |
| Debtors | 16,000 |
| Transport | 6,000 |
| Rent | 5,000 |
Calculate (showing all workings) the: (a) gross profit (b) average stock (c) net profit
Explanation
(a) Calculation of Gross Profit
Gross Profit = Sales — Cost of Sales:
Le
Sales 220,000
Less cost of sales:Le
Opening stock 60,000
Purchases180,000
240,000
Less closing stock 70,000170,000
Gross Profit 50,000
OR
Antie Justie Trading Account for the year ended 31st December, 2005
LeLe
Opening stock 60,000 Sales 220,000
Purchases 180,000
240,000
Less closing stock 70,000
Cost of goods sold 170,000
Gross Profit 50,000
220,000 220,000
(b) Calculation of Average Stock
Average Stock = Opening stock + Closing Stock
2
60,000 + 70.000= 65,000
2
(c) Calculation of Net Profit
Net Profit = Gross Profit — Expenses
Le
Gross Profit 50,000
Less expenses:(Le)
salaries 8,000
Transport 6,000
Rent 5,00019,000
31,000