The following trial balance has been extracted from the ledger of ABC LTD.
| ACCOUNT | DEBIT | CREDIT |
| SALES | 350,000 | |
| PURCHASES | 227,500 | |
| CARRIAGE INWARDS | 4,480 | |
| CARRIAGE OUTWARDS | 3,584 | |
| SALARIES AND WAGES | 3,870 | |
| RENT | 54,240 | |
| HEAT & LIGHT | 3,080 | |
| SUNDRY EXPENSES | 29,160 | |
| INVENTORY AS AT 1 JANUARY 2014 | 7,840 | |
| RECEIVABLES | 31,500 | |
| DIVIDEND PAID | 21,000 | |
| PAYABLES | 28,350 | |
| CASH ON HAND | 368 | |
| CASH AT BANK | 261 | |
| SHARE CAPITAL | 3,511 | |
| RESERVES | 4,500 | |
| 386,622 | 386,622 |
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 | 350,000 | ||
| INVENTORY OB | 7,840 | ||
| PURCHASE | 227,500 + 4,480 | 231,980 | |
| LESS INVENTORY CB | 9,408 | ||
| COST OF SALES | 230,412 | ||
| GROSS PROFIT | 119,588 | ||
| CARRIAGE OUTWARDS | 3,584 | ||
| SALARIES AND WAGES | 3,870 | ||
| RENT | 54,240 | ||
| HEAT & LIGHT | 3,080 | ||
| SUNDRY EXPENSES | 29,160 | ||
| TOTAL EXPENSES | 93,934 | ||
| PROFIT | 25,654 |
Financial position
| ACCOUNT | DEBIT | CREDIT |
| CURRENT ASSETS | ||
| INVENTORY | 9,408 | |
| RECEIVABLES | 31,500 | |
| CASH | 368 | |
| TOTAL CURRENT ASSETS | 41,276 | |
| TOTAL ASSETS | 41,276 | |
| ACCOUNT | DEBIT | CREDIT |
| PAYABLES | 28,350 | |
| BANK | 261 | |
| TOTAL CURRENT LIABILITY | 28,611 | |
| Capital | 3,511 | |
| Reserves | 4,500 | |
| Profit | 25,654 | |
| Dividend paid | (21,000) | |
| TOTAL EQUITY (NET ASSETS) | 12,665 | |
| TOTAL LIABILITIES & EQUITY | 41,276 |