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:
- cost of goods sold;
- average stock;
- gross profit;
- net profit;
- 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, 000
D280, 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
Purchases 300,000 Sales 400,000 
370,000 
Cost of goods sold 280,000Gross profit 120,000
400,000 400,000
Net profit 81,000
120,000 120,000