Question 8
Bayachan Enterprise buys and sells groceries by mail order. The following are details of operation for the month of June 2018.
D
Stock 1st June, 2018 7,500
Purchases 19,500
Sales 36,000
Courier charges 5,500
Creditors 4,800
Debtors 5,000
Cash in hand 6,000
Rent of tricycle 9,200
Electricity charges 500
Stock 30th June, 2018 8,500
You are required to calculate:
(a) average stock;
(b) cost of goods sold;
(c) working capital;
(d) net profit.
Observation
The question was well attempted by many candidates and their performance was good.
The expected responses to the question include:
8.(a) Average Stock
= Opening stock + Closing stock
2
= D7,500 + D8,500
2
= 16,000
= D8,000
Alternative 1 (b)
(b) Cost of Goods Sold
D
Opening stock 7,500
Add Purchases 19,500
Goods available for sale 27,000
Less closing stock 8,500
Cost of good sold 18,500
(c) Working Capital
= Current assets – Current liability
Current assets: D
Stock 8,500
Debtors 5,000
Cash 6,000
19,500
Less Current liabilities:
Creditors 4,800
Working capital 14,700
Alternative 1 (d)
(d) D
Sales 36,000
Less cost of goods sold:
Opening stock 7,500
Add: purchases 19,500
27,000
Less: closing stock 8,500
Cost of sales 18,500
Gross profit 17,500
Less: expenses:
Electricity 500
Courier charges 5,500
Rent of tricycle 9,200
15,200
Net profit 2,300