The following trial balance has been extracted from the ledger of ABC LTD.
| ACCOUNT | DEBIT | CREDIT |
| SALES | 250,000 | |
| PURCHASES | 162,500 | |
| CARRIAGE INWARDS | 2,240 | |
| CARRIAGE OUTWARDS | 1,792 | |
| SALARIES AND WAGES | 5,160 | |
| RENT | 33,900 | |
| HEAT & LIGHT | 2,640 | |
| SUNDRY EXPENSES | 32,805 | |
| INVENTORY AS AT 1 JANUARY 2014 | 1,960 | |
| RECEIVABLES | 18,000 | |
| DIVIDEND PAID | 24,000 | |
| PAYABLES | 16,200 | |
| CASH ON HAND | 92 | |
| CASH AT BANK | 696 | |
| SHARE CAPITAL | 193 | |
| RESERVES | 18,000 | |
| 285,089 | 285,089 |
Closing inventory has been counted and is valued at $2,352.
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 | 250,000 | ||
| INVENTORY OB | 1,960 | ||
| PURCHASE | 162,500 + 2,240 | 164,740 | |
| LESS INVENTORY CB | 2,352 | ||
| COST OF SALES | 164,348 | ||
| GROSS PROFIT | 85,652 | ||
| CARRIAGE OUTWARDS | 1,792 | ||
| SALARIES AND WAGES | 5,160 | ||
| RENT | 33,900 | ||
| HEAT & LIGHT | 2,640 | ||
| SUNDRY EXPENSES | 32,805 | ||
| TOTAL EXPENSES | 76,297 | ||
| PROFIT | 9,355 |
Financial position
| ACCOUNT | DEBIT | CREDIT |
| CURRENT ASSETS | ||
| INVENTORY | 2,352 | |
| RECEIVABLES | 18,000 | |
| CASH | 92 | |
| TOTAL CURRENT ASSETS | 20,444 | |
| TOTAL ASSETS | 20,444 | |
| ACCOUNT | DEBIT | CREDIT |
| PAYABLES | 16,200 | |
| BANK | 696 | |
| TOTAL CURRENT LIABILITY | 16,896 | |
| Capital | 193 | |
| Reserves | 18,000 | |
| Profit | 9,355 | |
| Dividend paid | (24,000) | |
| TOTAL EQUITY (NET ASSETS) | 3,548 | |
| TOTAL LIABILITIES & EQUITY | 20,444 |