Commerce WASSCE (PC 2ND), 2018

Question 8

 

 

  • The following balances were extracted from the books of Bampenu Enterprise as at 31st December, 2016.
                                        D
    Sales               400,000
    Stock 1/1/06         70,000
    Stock 31/12/06       90,000
    Purchases           300,000
    Sales expenses        23,000
    Wages and Salaries     16,000

     

    From the above information, calculate:

     

    1. cost of goods sold;
    2. average stock;
    3. gross profit;
    4. net profit;
    5. net profit as a percentage of sales.

     

    Observation

     

     

    The question was well attempted by many candidates. However some candidate lost marks because they did not indicate the currency sign in their answers.

    The expected responses to the question include:

     

    8(a) Cost of Goods Sold = Opening stock + Purchases less closing stock         

            = (D70, 000 + D300, 000)

     D90, 000D280, 000          

    8(b) Average stock = (Opening stock + Closing stock)

    2  

                                                    =       = D80, 000                 

     

    8(c)    Gross profit = Sales less Cost of goods sold     1mk
    = (D400, 000  D280, 000)  = D120, 000        

     

    8(d)    Net profit = Gross profit less Expenses 

                                       = D120, 000      = D 81,000                        

    8(e)    Net profit % =    100

                                           =    100   =   20.25%                              

    Alternative solution for 8a,8c and 8d
     



              Bampenu Enterprise Trading, Profit and Loss A/C as at 31/12/2006

     

     

     
                                     D                        D
    Purchases                            300,000               Sales    400,000      
     Opening stock                        70,000                         
                                       370,000 
     Less closing stock                     90,000
     Cost of goods sold                     280,000
    Gross profit                          120,000
                                       400,000                        400,000
     

     

      



     Sales expenses                         23000              Gross profit     120,000
     Wages and salaries                     16000
    Net profit                              81,000                                    120,000                            120,000