Incomplete Record (Extract) Sales......................................₦10,600 Rent...........................₦200 Depreciation of vehicle (cost ₦5000) 10% ...

Incomplete Record (Extract)

Sales......................................₦10,600

Rent...........................₦200

Depreciation of vehicle (cost ₦5000) 10%

Gross profit margin is 20%

Calculate the net profit?

Answer Details

To calculate the net profit, we need to first calculate the cost of goods sold (COGS) using the gross profit margin formula: Gross Profit Margin = (Revenue - COGS) / Revenue Re-arranging the formula, we get: COGS = Revenue - (Gross Profit Margin x Revenue) Given that the gross profit margin is 20%, we can calculate the COGS as follows: COGS = 10,600 - (0.20 x 10,600) = ₦8,480 To calculate the net profit, we need to deduct all expenses from the gross profit. From the extract, we have only one expense, which is depreciation. Depreciation of the vehicle is 10% of its cost of ₦5,000, which is ₦500. Therefore, the net profit can be calculated as: Net Profit = Gross Profit - Expenses Net Profit = 10,600 - 8,480 - 200 - 500 = ₦1,420 Hence, the answer is ₦1,420.