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JAMB Principles of Accounts 1995 Question 45

Question 45

Branch Accounts

The Asa branch of Emene Company Ltd. made a sales of ₦549 000 from the goods sent from the head office during the period ended 31/12/94. These sales were based on a 22% mark up. If branch expenses were ₦34 400 and there were no discrepancies, what should be the net profit of the branch for the period?

  1. A.₦6 500
  2. B.₦64 600
  3. C.₦85 380
  4. D.₦514 600
Show the answer and explanation

Answer: B (₦64 600)

Explanation

Cost = 549 000 ÷ 1.22 = ₦450 000, so gross profit = ₦99 000. Net profit = 99 000 − 34 400 = ₦64 600.