WAEC SSCE - Financial Accounting - 1990 (Objective)

Question 1 Report

Use the following information to answer the given question:
\(\begin{array}{c|c} & N \\ \hline \text{Stock at 1st Jan. 1901} & 6,500 \\ \text{Stock at 31st Dec. 1901} & 5,500 \\ \text{Creditors at 1st Jan. 1901} & 4,000 \\ \text{Creditors at 31st December 1901} & 5,000 \\ \text{cash paid for goods during the year} & 20,000 \\ \text{Gross profit} & \text{25% on cost} \\ \text{Administrative and selling expenses} & 2,750
\end{array}\)
Calculate the percentage of net profit on sales

25%

22%

21%

20%

10%

Answer Details

To calculate the percentage of net profit on sales, we need to find the net profit and divide it by the total sales. First, we need to calculate the cost of goods sold. We can do this by finding the difference between the stock at the beginning of the year and the stock at the end of the year, and adding to it the cash paid for goods during the year: Cost of goods sold = 6,500 - 5,500 + 20,000 = 21,000 Next, we can calculate the gross profit by multiplying the cost of goods sold by 25%: Gross profit = 21,000 x 25% = 5,250 To find the net profit, we need to subtract the administrative and selling expenses from the gross profit: Net profit = 5,250 - 2,750 = 2,500 Finally, we can calculate the percentage of net profit on sales by dividing the net profit by the total sales, which is the sum of the cost of goods sold and the gross profit: Percentage of net profit on sales = (2,500 / (21,000 + 5,250)) x 100% = 10% Therefore, the percentage of net profit on sales is 10%. In summary, we can calculate the percentage of net profit on sales by dividing the net profit by the total sales, which is the sum of the cost of goods sold and the gross profit. The percentage of net profit on sales for this problem is 10%.






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