The following information relates to Raisa's grocery store as of 31st December 2018. Stock -1st January 2018 20,000 Purchases 150,000 Sales 230,000 Carriage...
Question 1 Report
The following information relates to Raisa's grocery store as of 31st December 2018.
| Stock -1st January 2018 | 20,000 |
| Purchases | 150,000 |
| Sales | 230,000 |
| Carriage inwards | 4,000 |
| Rent received | 80,000 |
| Salaries | 29,000 |
| Stock -31st December 2018 |
You are required to calculate:
(a) cost of goods sold
(b) gross profit
(c) net profit
(d) percentage of gross profit
Answer Details
Raisa's grocery store: Trading, Profit and Loss Account for the year ended 31st December 2018
| Item | N | N |
|---|---|---|
| Sales | 230,000 | |
| Opening stock (1 Jan 2018) | 20,000 | |
| Add: Purchases | 150,000 | |
| Add: Carriage inwards | 4,000 | |
| Cost of goods available for sale | 174,000 | |
| Less: Closing stock (31 Dec 2018) | 35,000 | |
| Cost of goods sold | 139,000 | |
| Gross profit | 91,000 |
(a) Cost of goods sold
= Opening stock + Purchases + Carriage inwards - Closing stock
= 20,000 + 150,000 + 4,000 - 35,000 = N139,000
(b) Gross profit
= Sales - Cost of goods sold = 230,000 - 139,000 = N91,000
(c) Net profit
In the Profit and Loss Account the gross profit is brought down, other income (rent received) is added and the running expense (salaries) is deducted:
= Gross profit + Rent received - Salaries
= 91,000 + 80,000 - 29,000 = N142,000
(d) Percentage of gross profit (on sales)
\[ \frac{\text{Gross profit}}{\text{Sales}} \times 100 = \frac{91,000}{230,000} \times 100 = 39.57\% \]
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