Question

8. The following information was extracted from the books of XYZ Ventures as at 31st June 2023: Opening stock Le200,000; Closing stock Le100,000; Salaries and wages Le120,000; Purchases Le900,000; Shop rent Le150,000. 30% profit was made on cost of goods sold. You are required to calculate: (a) cost of goods sold; (b) gross profit; (c) total sales; (d) net profit; (e) rate of turnover.

Accepted Answer

(a) Cost of goods sold: Opening stock 200,000 + Purchases 900,000 = Cost of goods available for sale 1,100,000. Less closing stock 100,000 = Cost of goods sold Le1,000,000.

(b) Gross profit = 30% of cost of goods sold = 30% x Le1,000,000 = Le300,000.

(c) Total sales = Cost of goods sold + Gross profit = Le1,000,000 + Le300,000 = Le1,300,000.

(d) Net profit: Gross profit Le300,000. Less expenses (Salaries and wages Le120,000 + Shop rent Le150,000 = Le270,000). Net Profit = Le300,000 - Le270,000 = Le30,000.

(e) Rate of turnover = Cost of goods sold / Average stock. Average stock = (Opening stock + Closing stock)/2 = Le(200,000+100,000)/2 = Le150,000. Rate of turnover = Le1,000,000/Le150,000 = 6.67 times.

WAEC Commerce 2024 Theory — Question 8

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