Accounts - Principles of Accounts
JAMB 2017
\(\begin{array}{c|c} & \text{N} \\ \hline \text{Debtors opening} & 4000 \\ \hline \text{Debtors closing} & 1500 \\ \hline \text{Cash received from debtors} & 8500 \\ \hline \text{Bad debts written off} & 350 \\ \hline \text{Discount allowed} & 500 \\ \hline \text{Discount received} & 1000
\end{array}\)
If the gross profit is N5 000, what is the net profit?
-
A.
₦4,350
-
B.
₦6,000
-
C.
₦5,150
-
D.
₦4,000
Correct Answer: Option C
Explanation
If the gross profit is ₦5,000, then the net profit is calculated below;
The item that will appear in the profit and loss account are;
Bad debt written off ₦350, Discount allowed ₦500 and Discount received ₦1,000
\(\begin{array}{c|c} \text{Gross Profit} & 5000 & \\ \hline \text{Discount Received} & 1000 & 6000 \\ \hline \text{Expenses} & & \\ \hline \text{Bad debt.} & 350 & \\ \hline \text{Discout Allowed} & 500 & 850 \\ \hline \text{Net profit} &
& 5,150 \end{array}\)
Net profit is the profit made after all the expenses incurred are deducted from the gross profit
₦5150 is the net profit calculated i.e bad debt 350 &nplus; discount allowed 500 &nplus; net profit 5,150 less gross profit 5,000 + discount received 1,000
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