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
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.
i. To calculate the cash paid for the goods bought:
We need to first determine the total cost of the goods before any discounts. We can do this by multiplying the number of cartons by the price per carton and adding up the amounts for all four types of goods:
- Sweets: 15 x 2,000 = 30,000
- Milk: 25 x 4,000 = 100,000
- Sugar: 15 x 3,000 = 45,000
- Soap: 17 x 5,000 = 85,000
Total cost = 30,000 + 100,000 + 45,000 + 85,000 = 260,000
Next, we can calculate the cash discount by multiplying the total cost by the cash discount rate of 6%:
Cash discount = 0.06 x 260,000 = 15,600
After subtracting the cash discount from the total cost, we can calculate the trade discount by multiplying the discounted cost by the trade discount rate of 10%:
Discounted cost = 260,000 - 15,600 = 244,400
Trade discount = 0.1 x 244,400 = 24,440
Finally, we can calculate the cash paid by subtracting both discounts from the total cost:
Cash paid = 260,000 - 15,600 - 24,440 = 220,960
Therefore, the cash paid for the goods bought, if payment was made within 7 days, is N 220,960.
ii. To determine the selling price of the goods with a markup of 20%:
We need to first calculate the cost of the goods. The cost of the goods is equal to the amount paid for the goods, which is N 220,960.
To calculate the selling price, we need to add the markup to the cost of the goods. The markup is equal to 20% of the cost of the goods:
Markup = 0.2 x 220,960 = 44,192
Selling price = Cost of goods + Markup = 220,960 + 44,192 = 265,152
Therefore, the selling price of all the goods with a markup of 20% is N 265,152.
iii. To calculate the net profit made:
We need to subtract the total cost of the goods sold (i.e., the cost of the goods plus any other expenses incurred in obtaining and storing the goods) from the total revenue generated from the sale of the goods (i.e., the selling price of the goods).
Since we assumed that the cost of the goods is equal to the amount paid for the goods, which is N 220,960, and the selling price of the goods is N 265,152, we can calculate the net profit as follows:
Net profit = Selling price - Cost of goods sold
Cost of goods sold = Cost of goods
Net profit = Selling price - Cost of goods
Net profit = 265,152 - 220,960
Net profit = 44,192