ACCA Applied Skills · Financial Reporting · Not-for-profit and public sector entities
A charity runs a bar for its members. Bar takings were $64,000, opening inventory $3,000, purchases $38,000, closing inventory $5,000, and bar staff wages $12,000. What is the bar profit to be transferred to the income and expenditure account?
The bar profit is $16,000. Cost of sales is opening inventory $3,000 plus purchases $38,000 less closing inventory $5,000, which is $36,000. Takings of $64,000 less this gives $28,000 gross profit, and deducting wages of $12,000 leaves $16,000.
- A$14,000Correct
- B$18,000
- C$26,000
- D$16,000
Explanation
Cost of sales = 3,000 + 38,000 - 5,000 = 36,000. Gross profit = 64,000 - 36,000 = 28,000. Less wages 12,000 gives $16,000. Rechecking: 28,000 - 12,000 = 16,000, so the correct answer is $16,000.
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