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ACCA Applied Knowledge · Financial Accounting · Double-entry bookkeeping principles including the maintenance of accounting records

Nadir Co's trial balance extract at 30 June shows: sales $640,000; sales returns $15,000; opening inventory $48,000; purchases $410,000; purchase returns $10,000; carriage inwards $6,000; carriage outwards $9,000. Closing inventory is $52,000. What is gross profit?

Gross profit is $223,000 (net sales $625,000 less cost of sales $402,000), which does not appear among the options, so the item is invalid.

  1. A$267,000Correct
  2. B$258,000
  3. C$273,000
  4. D$264,000

Explanation

Net sales = 640,000 - 15,000 = 625,000. Cost of sales = 48,000 + (410,000 - 10,000) + 6,000 - 52,000 = 402,000. Gross profit = 625,000 - 402,000 = 223,000... this exceeds no option, so recheck: 48,000+400,000+6,000 = 454,000; less 52,000 = 402,000. Gross profit is $223,000, which is not among the options, so this item is invalid.

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