The following information was extracted from the books of Jinka Enterprises as of 31st August 2015 15 cartoons of sweets at N 2,000 per carton. 25 cartons o...
Question 1 Report
The following information was extracted from the books of Jinka Enterprises as of 31st August 2015
15 cartoons of sweets at N 2,000 per carton.
25 cartons of milk at 4,000 per carton.
15 cartons of sugar 3,000 per carton.
17 cartons of soap at x5,000 per carton
The following payments were made:
Rent and rates
Salaries and wages
Fuel
Electricity
A cash discount of 6% and a 10% trade discount were allowed if payment was made within 7 days.
i. Calculate how much cash was paid for the goods bought if payment was made within 7 days.
ii. If all the goods were sold at a mark up of 20% determine the selling price.
iii. Calculate the value of the newt profit made.
Answer Details
Cost of goods bought
| Item | Quantity | Unit price (N) | Amount (N) |
|---|---|---|---|
| Sweets | 15 | 2,000 | 30,000 |
| Milk | 25 | 4,000 | 100,000 |
| Sugar | 15 | 3,000 | 45,000 |
| Soap | 17 | 5,000 | 85,000 |
| Total | 260,000 |
(i) Cash paid if payment is made within 7 days. Deduct the trade discount first, then the cash discount.
| Cost of goods | N260,000 |
| Less 10% trade discount (10/100 x 260,000) | N26,000 |
| Value after trade discount | N234,000 |
| Less 6% cash discount (6/100 x 234,000) | N14,040 |
| Actual cash paid | N219,960 |
(ii) Selling price at a mark-up of 20%. The mark-up is added to the value of goods after trade discount:
\[\text{Mark-up}=\frac{20}{100}\times234{,}000=46{,}800\]\[\text{Selling price}=234{,}000+46{,}800=\mathbf{N280{,}800}.\](iii) Net profit.
| Gross profit (mark-up) | N46,800 |
| Add discount received | N14,040 |
| N60,840 | |
| Less expenses: Salaries and wages 8,000; Rent and rates 3,500; Fuel 2,000; Electricity 1,500 | N15,000 |
| Net profit | N45,840 |
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