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the following is an extract from the trial balance of Gardeners:
DR
non-current asset 50,000
inventory 2600
receivable 4500
cash 290
purchase 78900
rental expense 3400
sunday expense 13900CR
capital 28000
allowance for receivable 320
payables 5000
sales 120,000
bank interest 270additional notes
1)rent of $200 has been prepaid
2)inventory at the end of the year was $1900
3)the allowance for receivable is to be $200.
what is the profit for the year?
A)$23690
:)$23610
C)$23100
D)$25500sales 120,000
opeing inventory 2600
purchase 78900
less:closing inventory-$1900
total 79600
cost of sales-120,000-79600=40400
less:expense
rental expense 3200
sunday expense 13900
bank interest 270
net profit-23030
add:other income
decrease in allowance for receivable 120
total income 23030+120=23150which part i calculation wrongly?
can someone help me pls
For a start Decrease in Allowance for Receivable of 120 is NOT YOUR INCOME.
Now, My Profit comes up to be 22,910.
So, I took the easy way out… 🙂
I Just used the equation Asset = Capital + Liabilities.
According to that your answer should be A) 23,690.Are you sure you didn’t miss out anything from the question???
find profit.
should sales less cost of sales=gross profit
gross profit less expense=net profit
i know how to do already. thanks.
decrease in allowance is income CR
gross profit=40400
add other income
decrease in allowance 120
bank interest 270
total income 40790
less expense
rental expense 3200
sunday expense 13900
net profit 23690yes, you are rite.
I accidently didnt focus on bank interest on the CR side and not on the DR side. I was actually deducting it, thats y my profit did not come up to be 23690.
A Tip: Cases like these try balancing the equation ASSET = CAPITAl + Liabiities.
I just took all the assets added them up and got a figure of 56690. So I added all your answer options with the capital and liabilities to see which balances up to be the same. And it was option A) only.
Try It!
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