The following trial balance has been extracted from the ledger of ABC LTD.
| ACCOUNT | DEBIT | CREDIT |
| SALES | 150,000 | |
| PURCHASES | 97,500 | |
| CARRIAGE INWARDS | 5,040 | |
| CARRIAGE OUTWARDS | 4,032 | |
| SALARIES AND WAGES | 1,290 | |
| RENT | 20,340 | |
| HEAT & LIGHT | 880 | |
| SUNDRY EXPENSES | 21,870 | |
| INVENTORY AS AT 1 JANUARY 2014 | 7,840 | |
| RECEIVABLES | 31,500 | |
| DIVIDEND PAID | 9,000 | |
| PAYABLES | 28,350 | |
| CASH ON HAND | 184 | |
| CASH AT BANK | 87 | |
| SHARE CAPITAL | 3,039 | |
| RESERVES | 18,000 | |
| 199,476 | 199,476 |
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 | 150,000 | ||
| INVENTORY OB | 7,840 | ||
| PURCHASE | 97,500 + 5,040 | 102,540 | |
| LESS INVENTORY CB | 9,408 | ||
| COST OF SALES | 100,972 | ||
| GROSS PROFIT | 49,028 | ||
| CARRIAGE OUTWARDS | 4,032 | ||
| SALARIES AND WAGES | 1,290 | ||
| RENT | 20,340 | ||
| HEAT & LIGHT | 880 | ||
| SUNDRY EXPENSES | 21,870 | ||
| TOTAL EXPENSES | 48,412 | ||
| PROFIT | 616 |
Financial position
| ACCOUNT | DEBIT | CREDIT |
| CURRENT ASSETS | ||
| INVENTORY | 9,408 | |
| RECEIVABLES | 31,500 | |
| CASH | 184 | |
| TOTAL CURRENT ASSETS | 41,092 | |
| TOTAL ASSETS | 41,092 | |
| ACCOUNT | DEBIT | CREDIT |
| PAYABLES | 28,350 | |
| BANK | 87 | |
| TOTAL CURRENT LIABILITY | 28,437 | |
| Capital | 3,039 | |
| Reserves | 18,000 | |
| Profit | 616 | |
| Dividend paid | (9,000) | |
| TOTAL EQUITY (NET ASSETS) | 12,655 | |
| TOTAL LIABILITIES & EQUITY | 41,092 |