₦ Stock at branch 1st January at cost 400 Goods sent to branch at cost 8000 Returns to head office 340 Cash sales 9160 Stock at branch 31st December at cost...
Question 1 Report
| ₦ | |
| Stock at branch 1st January at cost | 400 |
| Goods sent to branch at cost | 8000 |
| Returns to head office | 340 |
| Cash sales | 9160 |
| Stock at branch 31st December at cost | 720 |
Use the information below to answer the question.
Adex Ltd. Issues stock to its retail branches at cost price. The following particulars relate to Ede branch.
Answer Details
To find the cost of goods sold (COGS) for the Ede branch, we need to calculate the cost of goods available for sale and then subtract the ending inventory.
The cost of goods available for sale is the sum of the stock at the beginning of the year and the goods sent to the branch during the year:
400 (stock at the beginning of the year) + 8000 (goods sent to the branch) = 8400
To calculate the COGS, we need to subtract the ending inventory from the cost of goods available for sale. The ending inventory is the stock at the end of the year:
8400 - 720 (stock at the end of the year) = 7680
Next, we need to adjust the COGS for any returns to the head office. The returns are given as 340, so we subtract this from the calculated COGS:
7680 - 340 = 7340
Finally, we need to calculate the gross profit by subtracting the COGS from the cash sales:
9160 - 7340 = 1820
Therefore, the answer is ₦1820, which represents the gross profit for the Ede branch.
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