Use the information below to answer question 4 and 5.Sales ₦20,000 Cost sales ₦10,000 Operating expenses ₦2,500 Expenses prepaid included In operating expen...
Question 1 Report
Use the information below to answer question 4 and 5.Sales ₦20,000
Cost sales ₦10,000
Operating expenses ₦2,500
Expenses prepaid included
In operating expenses ₦500Calculate the net profit?
Answer Details
To calculate the net profit, we need to subtract the total expenses from the total sales revenue.
The cost of sales is ₦10,000, and the operating expenses are ₦2,500. We are also told that ₦500 of the operating expenses is prepaid, which means that it should not be included in the calculation of expenses for this period.
Therefore, the total expenses for this period are ₦2,000 (i.e., ₦2,500 - ₦500).
To calculate the net profit, we subtract the total expenses (₦2,000) from the sales revenue (₦20,000):
Net profit = ₦20,000 - ₦10,000 - ₦2,000 = ₦8,000
Therefore, the answer is option (iii) ₦8,000.
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