The following represent extracts from the trading account of a retail outlet for a given month: Opening stock ₦2,400 Closing stock ₦6,400 Other expenses ₦2,...
The following represent extracts from the trading account of a retail outlet for a given month:
Opening stock ₦2,400
Closing stock ₦6,400
Other expenses ₦2,000
Sales ₦11,000
Profit ₦900
What is the purchase figure for the month?
Answer Details
To calculate the purchase figure for the month, we need to use the formula:
Purchase = Opening stock + Purchases - Closing stock
We have the opening stock as ₦2,400, and the closing stock as ₦6,400. We also know that the profit for the month is ₦900.
Using the formula above, we can rearrange it to solve for purchases:
Purchases = Closing stock + Cost of sales - Opening stock
We can calculate the cost of sales as the sales figure minus the other expenses and the profit:
Cost of sales = Sales - (Other expenses + Profit) = ₦11,000 - (₦2,000 + ₦900) = ₦8,100
Substituting the values we have into the formula, we get:
Purchases = ₦6,400 + ₦8,100 - ₦2,400 = ₦12,100
Therefore, the purchase figure for the month is ₦12,100. Answer is correct.