The following balances were extracted from the books of Adama Ltd on 31st August 2007...

JAMB 2024

The following balances were extracted from the books of Adama Ltd on 31st August 2007

	#
Sales	200000
Drawings	10000
Land and building	70000
Furniture	10000
Debtors	50000
Creditors	35000
Capital	85000
Bank	10000
General expenses	10000
Stock ( 31-08-2007)	10000
Purchases	140000
Stock (1-09- 2006)	20000

The gross profit is

A. #40,000
B. #50,000
C. #70,000
D. #60,000

WAEC and NECO CBT App for Mobile Devices - Candidates, Schools, Centres, Resellers - 100% Offline -Download Now

WAEC and NECO CBT Software for Computers and Laptops - Candidates, Schools, Centres, Resellers - 100% Offline -Download Now

Correct Answer: Option B

Explanation

Calculate the Cost of Goods Sold (COGS):
-
COGS = Opening Stock (1-09-2006) + Purchases - Closing Stock (31-08-2007)
COGS = # 20,000 + #140,000 - #10,000
=
COGS #150,000
Calculate the Gross Profit:
Gross Profit = Sales - COGS
Gross Profit = # 200,000 - #150,000
Gross Profit = #50,000

Previous Next

Go back to Acc classroom

Report an Error Ask A Question Download App