The following information is from the books of... | WAEC SSCE - Commerce - 2009 (Objective)

Question 1 Report

The following information is from the books of Auntie Justie, who sells books, for the year ended 31/12/15

Calculate (showing all workings) the: (a) gross profit (b) average stock (c) net profit

Answer

Auntie Justie - year ended 31/12/15

(a) Gross profit

Cost of goods sold = Opening stock + Purchases - Closing stock

= 60,000 + 180,000 - 70,000 = Le170,000

Gross profit = Sales - Cost of goods sold = 220,000 - 170,000 = Le50,000

(b) Average stock

= (Opening stock + Closing stock) / 2 = (60,000 + 70,000) / 2 = Le65,000

(c) Net profit

Total expenses = Salaries and wages + Transport + Rent = 8,000 + 6,000 + 5,000 = Le19,000

(Debtors of 16,000 is an asset, not an expense, so it is excluded.)

Net profit = Gross profit - Total expenses = 50,000 - 19,000 = Le31,000

Answer Details