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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?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
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
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