The following trial balance has been extracted from the ledger of ABC LTD.
| ACCOUNT | DEBIT | CREDIT |
| SALES | 200,000 | |
| PURCHASES | 130,000 | |
| CARRIAGE INWARDS | 1,680 | |
| CARRIAGE OUTWARDS | 1,344 | |
| SALARIES AND WAGES | 5,805 | |
| RENT | 13,560 | |
| HEAT & LIGHT | 2,200 | |
| SUNDRY EXPENSES | 14,580 | |
| INVENTORY AS AT 1 JANUARY 2014 | 7,840 | |
| RECEIVABLES | 22,500 | |
| DIVIDEND PAID | 27,000 | |
| PAYABLES | 20,250 | |
| CASH ON HAND | 322 | |
| CASH AT BANK | 696 | |
| SHARE CAPITAL | 1,385 | |
| RESERVES | 4,500 | |
| 226,831 | 226,831 |
Closing inventory has been counted and is valued at $9,408.
Require:
1. What is the gross profit for the year?
2. What is the profit befor tax for the year?
3. What is the Net assets?
SUGGESTED SOLUTIONS
Income statement
| ACCOUNT | WORKING | DEBIT | CREDIT |
| REVENUE | 200,000 | ||
| INVENTORY OB | 7,840 | ||
| PURCHASE | 130,000 + 1,680 | 131,680 | |
| LESS INVENTORY CB | 9,408 | ||
| COST OF SALES | 130,112 | ||
| GROSS PROFIT | 69,888 | ||
| CARRIAGE OUTWARDS | 1,344 | ||
| SALARIES AND WAGES | 5,805 | ||
| RENT | 13,560 | ||
| HEAT & LIGHT | 2,200 | ||
| SUNDRY EXPENSES | 14,580 | ||
| TOTAL EXPENSES | 37,489 | ||
| PROFIT | 32,399 |
Financial position
| ACCOUNT | DEBIT | CREDIT |
| CURRENT ASSETS | ||
| INVENTORY | 9,408 | |
| RECEIVABLES | 22,500 | |
| CASH | 322 | |
| TOTAL CURRENT ASSETS | 32,230 | |
| TOTAL ASSETS | 32,230 | |
| ACCOUNT | DEBIT | CREDIT |
| PAYABLES | 20,250 | |
| BANK | 696 | |
| TOTAL CURRENT LIABILITY | 20,946 | |
| Capital | 1,385 | |
| Reserves | 4,500 | |
| Profit | 32,399 | |
| Dividend paid | (27,000) | |
| TOTAL EQUITY (NET ASSETS) | 11,284 | |
| TOTAL LIABILITIES & EQUITY | 32,230 |