Use this information below to answer this question.Trading Account (Extract).................N.............................N...... Opening stock...19500.......
Question 1 Report
Use this information below to answer this question.Trading Account (Extract).................N.............................N......
Opening stock...19500........Sales............96 000..
Add purchases...68700.................................
................88200.................................
Less closing stock..?.................................
Cost of goods sold..?.................................
Gross profit C/D....?.................................
....................?..........................?......
The gross profit margin is 20%
Determine the closing stock
Answer Details
The gross profit margin is given as 20%, which means that the cost of goods sold (COGS) is equal to 80% of the total sales.
Total sales = ₦96,000
80% of sales = 0.8 x ₦96,000 = ₦76,800 (which is the cost of goods sold)
To calculate the closing stock, we use the formula:
Closing stock = Opening stock + Purchases - Cost of goods sold
We are given the opening stock as ₦19,500 and the purchases as ₦68,700.
Therefore:
Closing stock = ₦19,500 + ₦68,700 - ₦76,800
Closing stock = ₦11,400
Therefore, the closing stock is ₦11,400.
Hence, the correct answer is: ₦11,400.
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