Use the information below to answer questions Adex Ltd. issues stock to its retail branches at cost price. The following particulars relate to Ede branch.St...

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To calculate the gross profit carried to the profit and loss account, we need to determine the cost of goods sold (COGS) first. We can calculate COGS by subtracting the cost of the ending inventory from the cost of goods available for sale. Cost of goods available for sale = Cost of stock at branch 1st January + Goods sent to branch at cost - Returns to head Cost of goods available for sale = ₦400 + ₦8000 - ₦340 Cost of goods available for sale = ₦8,060 Cost of ending inventory = Cost of stock at branch 31st December at cost Cost of ending inventory = ₦720 Cost of goods sold = Cost of goods available for sale - Cost of ending inventory Cost of goods sold = ₦8,060 - ₦720 Cost of goods sold = ₦7,340 Now that we have determined the cost of goods sold, we can calculate the gross profit as follows: Gross profit = Sales - Cost of goods sold Gross profit = Cash sales Gross profit = ₦9,160 - ₦7,340 Gross profit = ₦1,820 Therefore, the gross profit carried to the profit and loss account is ₦1,820.