The following balances were extracted from the books of Onuoha, a trader on 31st December 2005
| Audit fee | 12000 |
| General expenses | 30000 |
| Purchases | 70000 |
| Commission paid | 30000 |
| Stock (1 – 01 – 2005) | 10000 |
| Stock ( 31 – 12 – 2005) | 15000 |
| Sales | 120000 |
The gross profit is
- #35,000
- #45,000
-
#55,000
- #25,000
The correct answer is: C
Explanation
Calculate the Cost of Goods Sold (COGS): COGS = Opening Stock (1-01-2005) + Purchases - Closing Stock (31-12-2005) COGS = #10,000 + #70,000 - #15,000 COGS = #65,000
Calculate the Gross Profit: Gross Profit = Sales - COGS Gross Profit = #120,000 - #65,000 Gross Profit = #55,000