The following information relates to Raisa's... | WAEC SSCE - Commerce - 2020 (Essay)

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

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)

\[ \frac{\text{Gross profit}}{\text{Sales}} \times 100 = \frac{91,000}{230,000} \times 100 = 39.57\% \]

Read lesson note on Business Capital And Profits (WAEC)

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