Le Rent 25,000 sales 850,000 return outwards... | WAEC SSCE - Commerce - 2013 (Essay)

Question 1 Report

	Le
Rent	25,000
sales	850,000
return outwards	15,000
purchase	400,000
returns inwards	25,000
Insurance	45,000
fixtures and fittings	15,000
wages and salaries	112,000
Transport	6,000

From the above information calculate the: (a) turnover (b) cost of goods sold (c) gross profit (d) Rate of stock turn

Answer

Trading information (in Le)

Item	Le
Sales	850,000
Returns inwards	25,000
Purchases	400,000
Returns outwards	15,000
Rent	25,000
Insurance	45,000
Wages and salaries	112,000
Transport	6,000

(a) Turnover = Sales - Returns inwards = 850,000 - 25,000 = Le825,000

(b) Cost of goods sold = Opening stock + Purchases - Returns outwards - Closing stock. With opening and closing stock both nil:

= 0 + 400,000 - 15,000 - 0 = Le385,000

(c) Gross profit = Turnover - Cost of goods sold = 825,000 - 385,000 = Le440,000

(d) Rate of stock turn

\[ \text{Rate of stock turn} = \frac{\text{Cost of goods sold}}{\text{Average stock}}, \qquad \text{Average stock} = \frac{\text{Opening stock} + \text{Closing stock}}{2} \]

Since no opening or closing stock is given, average stock = \( \dfrac{0 + 0}{2} = \text{Le}0 \), so the rate of stock turn is indeterminate from the data provided (there is no stock held to turn over).

Read lesson note on Commerce (JAMB)

Answer Details

Trading information (in Le)

Item	Le
Sales	850,000
Returns inwards	25,000
Purchases	400,000
Returns outwards	15,000
Rent	25,000
Insurance	45,000
Wages and salaries	112,000
Transport	6,000

(a) Turnover = Sales - Returns inwards = 850,000 - 25,000 = Le825,000

(b) Cost of goods sold = Opening stock + Purchases - Returns outwards - Closing stock. With opening and closing stock both nil:

= 0 + 400,000 - 15,000 - 0 = Le385,000

(c) Gross profit = Turnover - Cost of goods sold = 825,000 - 385,000 = Le440,000

(d) Rate of stock turn

\[ \text{Rate of stock turn} = \frac{\text{Cost of goods sold}}{\text{Average stock}}, \qquad \text{Average stock} = \frac{\text{Opening stock} + \text{Closing stock}}{2} \]

Read lesson note on Commerce (JAMB)

Commerce

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Le Rent 25,000 sales 850,000 return outwards 15,000 purchase 400,000 returns inwards 25,000 Insurance 45,000 fixtures and fittings 15,000 wages and salaries...

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Le Rent 25,000 sales 850,000 return outwards 15,000 purchase 400,000 returns inwards 25,000 Insurance 45,000 fixtures and fittings 15,000 wages and salaries...

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