The following trial balance has been extracted from the ledger of ABC LTD.
| ACCOUNT | DEBIT | CREDIT |
| SALES | 300,000 | |
| PURCHASES | 195,000 | |
| CARRIAGE INWARDS | 1,120 | |
| CARRIAGE OUTWARDS | 896 | |
| SALARIES AND WAGES | 1,290 | |
| RENT | 47,460 | |
| HEAT & LIGHT | 2,640 | |
| SUNDRY EXPENSES | 32,805 | |
| INVENTORY AS AT 1 JANUARY 2014 | 980 | |
| RECEIVABLES | 22,500 | |
| DIVIDEND PAID | 27,000 | |
| PAYABLES | 20,250 | |
| CASH ON HAND | 276 | |
| CASH AT BANK | 522 | |
| SHARE CAPITAL | 2,195 | |
| RESERVES | 9,000 | |
| 331,967 | 331,967 |
Closing inventory has been counted and is valued at $1,176.
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 | 300,000 | ||
| INVENTORY OB | 980 | ||
| PURCHASE | 195,000 + 1,120 | 196,120 | |
| LESS INVENTORY CB | 1,176 | ||
| COST OF SALES | 195,924 | ||
| GROSS PROFIT | 104,076 | ||
| CARRIAGE OUTWARDS | 896 | ||
| SALARIES AND WAGES | 1,290 | ||
| RENT | 47,460 | ||
| HEAT & LIGHT | 2,640 | ||
| SUNDRY EXPENSES | 32,805 | ||
| TOTAL EXPENSES | 85,091 | ||
| PROFIT | 18,985 |
Financial position
| ACCOUNT | DEBIT | CREDIT |
| CURRENT ASSETS | ||
| INVENTORY | 1,176 | |
| RECEIVABLES | 22,500 | |
| CASH | 276 | |
| TOTAL CURRENT ASSETS | 23,952 | |
| TOTAL ASSETS | 23,952 | |
| ACCOUNT | DEBIT | CREDIT |
| PAYABLES | 20,250 | |
| BANK | 522 | |
| TOTAL CURRENT LIABILITY | 20,772 | |
| Capital | 2,195 | |
| Reserves | 9,000 | |
| Profit | 18,985 | |
| Dividend paid | (27,000) | |
| TOTAL EQUITY (NET ASSETS) | 3,180 | |
| TOTAL LIABILITIES & EQUITY | 23,952 |