The following trial balance has been extracted from the ledger of ABC LTD.
| ACCOUNT | DEBIT | CREDIT |
| SALES | 200,000 | |
| PURCHASES | 130,000 | |
| CARRIAGE INWARDS | 2,240 | |
| CARRIAGE OUTWARDS | 1,792 | |
| SALARIES AND WAGES | 4,515 | |
| RENT | 27,120 | |
| HEAT & LIGHT | 3,520 | |
| SUNDRY EXPENSES | 21,870 | |
| INVENTORY AS AT 1 JANUARY 2014 | 6,860 | |
| RECEIVABLES | 40,500 | |
| DIVIDEND PAID | 18,000 | |
| PAYABLES | 36,450 | |
| CASH ON HAND | 230 | |
| CASH AT BANK | 783 | |
| SHARE CAPITAL | 1,414 | |
| RESERVES | 18,000 | |
| 256,647 | 256,647 |
Closing inventory has been counted and is valued at $8,232.
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 | 6,860 | ||
| PURCHASE | 130,000 + 2,240 | 132,240 | |
| LESS INVENTORY CB | 8,232 | ||
| COST OF SALES | 130,868 | ||
| GROSS PROFIT | 69,132 | ||
| CARRIAGE OUTWARDS | 1,792 | ||
| SALARIES AND WAGES | 4,515 | ||
| RENT | 27,120 | ||
| HEAT & LIGHT | 3,520 | ||
| SUNDRY EXPENSES | 21,870 | ||
| TOTAL EXPENSES | 58,817 | ||
| PROFIT | 10,315 |
Financial position
| ACCOUNT | DEBIT | CREDIT |
| CURRENT ASSETS | ||
| INVENTORY | 8,232 | |
| RECEIVABLES | 40,500 | |
| CASH | 230 | |
| TOTAL CURRENT ASSETS | 48,962 | |
| TOTAL ASSETS | 48,962 | |
| ACCOUNT | DEBIT | CREDIT |
| PAYABLES | 36,450 | |
| BANK | 783 | |
| TOTAL CURRENT LIABILITY | 37,233 | |
| Capital | 1,414 | |
| Reserves | 18,000 | |
| Profit | 10,315 | |
| Dividend paid | (18,000) | |
| TOTAL EQUITY (NET ASSETS) | 11,729 | |
| TOTAL LIABILITIES & EQUITY | 48,962 |