Theory question 108
Business CalculationsCommerce 2 (theory)
The following information relates to Raisa's grocery store as at 31st December 2018.
Stock - 1st January 2018 – Le 20,000
Purchases – Le 150,000
Sales – Le 230,000
Carriage inwards – Le 4,000
Rent received – Le 80,000
Salaries – Le 29,000
Stock - 31st December 2018 – Le 35,000
You are required to calculate:
(a) cost of goods sold;
(b) gross profit;
(c) net profit;
(d) percentage of gross profit.
Show the model answer
(a) Cost of goods sold = opening stock + purchases + carriage inwards − closing stock = 20,000 + 150,000 + 4,000 − 35,000 = Le 139,000.
(b) Gross profit = sales − cost of goods sold = 230,000 − 139,000 = Le 91,000.
(c) Net profit = gross profit + rent received − salaries = 91,000 + 80,000 − 29,000 = Le 142,000.
(d) Gross profit percentage (on sales) = 91,000 ÷ 230,000 × 100 ≈ 39.6%.
Carriage inwards goes into cost of goods sold; rent received is added in the profit and loss part.