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CMA Intermediate · Financial Accounting · Final Accounts of Commercial Organisations

Sharma Traders has opening stock of Rs 40,000, purchases of Rs 3,20,000, purchase returns of Rs 20,000, carriage inward of Rs 10,000, sales of Rs 4,50,000 and sales returns of Rs 10,000. Closing stock is Rs 50,000. What is the gross profit?

Gross profit is Rs 1,40,000. Net sales are Rs 4,40,000 after returns, and cost of goods sold is Rs 3,00,000 (opening stock plus net purchases plus carriage inward less closing stock). Subtracting gives Rs 1,40,000.

  1. ARs 1,50,000
  2. BRs 1,40,000Correct
  3. CRs 1,30,000
  4. DRs 1,60,000

Explanation

Net sales = 4,50,000 - 10,000 = 4,40,000. Cost of goods sold = 40,000 + (3,20,000 - 20,000) + 10,000 - 50,000 = 3,00,000. Gross profit = 4,40,000 - 3,00,000 = 1,40,000. Rs 1,50,000 results from ignoring sales returns.

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