The following are the trading of Zainab Trading Co. Ltd, for the year ended 31st December, 1986.
Creditors 20,000
Premises 20,000
Machinery 20,000
cash 20000
Debtors 30,000
stock 50,000
cost of goods sold 100,000
sales 200,000
plant 30,000
Rent 10,000
From the above, calculate the (a) Fixed assets; (b) working capital; (c) gross profit (d) net profit.
Explanation
(a) Fixed Assets:
Premises 20,000
Machinery 20,000
Plant 30,000
#70,000
(b) Working Capital =Current Assets - Current Liabilities
Current Assets:
Cash 20,000
Debtors 30,000
Stock 50,000
100,000
Current Liabilities:
Creditors 20,000
Working Capital = CA - CL = 100,000 - 20,000 = 80,000.
(c) Gross Profit = Sales - Cost of goods sold
200,000 - 100,000 = #100,000
(d) Net Profit = Gross Profit - Expenses (Rent)
= 100,000 - 10,000 = #90,000