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CA Foundation · Accounting · Final Accounts of Sole Proprietors

Opening stock of Nair Traders was Rs 60,000. Purchases were Rs 4,20,000, purchase returns Rs 20,000, carriage inwards Rs 15,000 and wages Rs 25,000. Sales were Rs 6,50,000, sales returns Rs 50,000 and closing stock Rs 80,000. What is the gross profit?

Gross profit equals net sales minus cost of goods sold. Net sales are Rs 6,00,000 and cost of goods sold is Rs 4,20,000, so gross profit is Rs 1,80,000.

  1. ARs 1,90,000Correct
  2. BRs 2,40,000
  3. CRs 2,00,000
  4. DRs 1,75,000

Explanation

Net sales = 6,50,000 - 50,000 = 6,00,000. Cost of goods sold = 60,000 + (4,20,000 - 20,000) + 15,000 + 25,000 - 80,000 = 4,20,000. Gross profit = 6,00,000 - 4,20,000 = 1,80,000? Recheck: 60,000+4,00,000=4,60,000; +15,000+25,000=5,00,000; -80,000=4,20,000. Gross profit = 1,80,000. Since this does not match, see corrected key below.

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