The following trial balance has been extracted from the ledger of ABC LTD.
| ACCOUNT | DEBIT | CREDIT |
| SALES | 350,000 | |
| PURCHASES | 227,500 | |
| CARRIAGE INWARDS | 2,800 | |
| CARRIAGE OUTWARDS | 2,240 | |
| SALARIES AND WAGES | 3,870 | |
| RENT | 61,020 | |
| HEAT & LIGHT | 2,200 | |
| SUNDRY EXPENSES | 32,805 | |
| INVENTORY AS AT 1 JANUARY 2014 | 7,840 | |
| RECEIVABLES | 4,500 | |
| DIVIDEND PAID | 27,000 | |
| PAYABLES | 4,050 | |
| CASH ON HAND | 368 | |
| CASH AT BANK | 87 | |
| SHARE CAPITAL | 4,506 | |
| RESERVES | 13,500 | |
| 372,143 | 372,143 |
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 + 2,800 | 230,300 | |
| LESS INVENTORY CB | 9,408 | ||
| COST OF SALES | 228,732 | ||
| GROSS PROFIT | 121,268 | ||
| CARRIAGE OUTWARDS | 2,240 | ||
| SALARIES AND WAGES | 3,870 | ||
| RENT | 61,020 | ||
| HEAT & LIGHT | 2,200 | ||
| SUNDRY EXPENSES | 32,805 | ||
| TOTAL EXPENSES | 102,135 | ||
| PROFIT | 19,133 |
Financial position
| ACCOUNT | DEBIT | CREDIT |
| CURRENT ASSETS | ||
| INVENTORY | 9,408 | |
| RECEIVABLES | 4,500 | |
| CASH | 368 | |
| TOTAL CURRENT ASSETS | 14,276 | |
| TOTAL ASSETS | 14,276 | |
| ACCOUNT | DEBIT | CREDIT |
| PAYABLES | 4,050 | |
| BANK | 87 | |
| TOTAL CURRENT LIABILITY | 4,137 | |
| Capital | 4,506 | |
| Reserves | 13,500 | |
| Profit | 19,133 | |
| Dividend paid | (27,000) | |
| TOTAL EQUITY (NET ASSETS) | 10,139 | |
| TOTAL LIABILITIES & EQUITY | 14,276 |