If the closing inventory at 31 December was £5,000 and depreciation is to be ignored, which one of the following is true?
If the closing inventory at 31 December was £5,000 and depreciation is to be ignored, which one of the following is true?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
How to solve? 7
Transcribed Image Text:Hanley Ltd started trading on 1 January. Its trial balance at 31 December, the end of its first
year of trading is given below.
Debit
Credit
£
£
Opening capital
26,000
Turnover
95,000
Purchases
64,000
Rent
6,000
Motor van
18,000
Drawings
10,000
Other expenses
27,000
Bank overdraft
4,000
Total
125,000
125,000
If the closing inventory at 31 December was £5,000 and depreciation is to be ignored, which
one of the following is true?
Select one:
O a. The gross profit will be £31,500 and the net profit will be £25,000
o b. The gross profit will be £36,000 and the net profit will be £3,000
O c. The gross profit will be £31,000 and the net profit will be £3,000
o d. The gross profit will be £36,000 and the net profit will be £9,000
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education