The following trial balance has been extracted from the ledger of ABC LTD.
| ACCOUNT | DEBIT | CREDIT |
| SALES | 200,000 | |
| PURCHASES | 130,000 | |
| CARRIAGE INWARDS | 3,360 | |
| CARRIAGE OUTWARDS | 2,688 | |
| SALARIES AND WAGES | 3,225 | |
| RENT | 33,900 | |
| HEAT & LIGHT | 880 | |
| SUNDRY EXPENSES | 14,580 | |
| INVENTORY AS AT 1 JANUARY 2014 | 8,820 | |
| RECEIVABLES | 22,500 | |
| DIVIDEND PAID | 9,000 | |
| PAYABLES | 20,250 | |
| CASH ON HAND | 46 | |
| CASH AT BANK | 348 | |
| SHARE CAPITAL | 3,901 | |
| RESERVES | 4,500 | |
| 228,999 | 228,999 |
Closing inventory has been counted and is valued at $10,584.
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 | 8,820 | ||
| PURCHASE | 130,000 + 3,360 | 133,360 | |
| LESS INVENTORY CB | 10,584 | ||
| COST OF SALES | 131,596 | ||
| GROSS PROFIT | 68,404 | ||
| CARRIAGE OUTWARDS | 2,688 | ||
| SALARIES AND WAGES | 3,225 | ||
| RENT | 33,900 | ||
| HEAT & LIGHT | 880 | ||
| SUNDRY EXPENSES | 14,580 | ||
| TOTAL EXPENSES | 55,273 | ||
| PROFIT | 13,131 |
Financial position
| ACCOUNT | DEBIT | CREDIT |
| CURRENT ASSETS | ||
| INVENTORY | 10,584 | |
| RECEIVABLES | 22,500 | |
| CASH | 46 | |
| TOTAL CURRENT ASSETS | 33,130 | |
| TOTAL ASSETS | 33,130 | |
| ACCOUNT | DEBIT | CREDIT |
| PAYABLES | 20,250 | |
| BANK | 348 | |
| TOTAL CURRENT LIABILITY | 20,598 | |
| Capital | 3,901 | |
| Reserves | 4,500 | |
| Profit | 13,131 | |
| Dividend paid | (9,000) | |
| TOTAL EQUITY (NET ASSETS) | 12,532 | |
| TOTAL LIABILITIES & EQUITY | 33,130 |