I am not understanding how the gross profit and net profit is calculated in this question Step 1In the above question we have asked to prepare financial statement of John Brown with the help of given data for the year20X7 which are as below.Step 2Trading and Profit & Loss Account of John BrownFor the year ending 31st December 20x7ParticularsAmount in £ParticularsAmount in £To Opening Stock100,000By Sales400,000To Purchases350,000Less: Sales Return5,000395,000Less: Purchase Return6,200343,800By Closing Stock120,000To Wages and Salaries30,000Add: Accured Wages5,00035,000To Gross Profit36,200515,000515,000To Rates36 A6,000By Gross ProfitLess: Prepaid Rates 28.11 This question also relates to extended trial balances (see Exhibit 28.2)From the following trial balance of John Brown, store owner, prepare a trading account and profitand loss account for the year ended 31 December 20X7, and a balance sheet as at that date, takinginto consideration the adjustments shown below:Trial Balance as at 31 December 20X7DrCrSales400,000PurchasesSales returns350,0005,000Purchases returns6,200Opening stock at 1 January 20X7Provision for doubtful debts100,00080030,0006,0001,000Wages and salariesRatesTelephoneShop fittings at costVan at cost40,00030,0009,800200Debtors and creditors7,000Bad debtsCapitalBank balance179,0003,00018,000593,000Drawings593,000(i) Closing stock at 31 December 20X7 £120,000.(ii) Accrued wages £5,000.(iii) Rates prepaid £500.(iv) The provision for doubtful debts to be increased to 10 per cent of debtors.(v) Telephone account outstanding £220.(vi) Depreciate shop fittings at 10 per cent per annum, and van at 20 per cent per annum, on cost.

Step 1 In the above question we have asked to prepare financial statement of John Brown with the help of given data for the year 20X7 which are as below. Step 2 Trading and Profit & Loss Account of John Brown For the year ending 31st December 20x7 Particulars Amount in £ Particulars Amount in £ To Opening Stock 100,000 By Sales 400,000 To Purchases 350,000 Less: Sales Return 5,000 395,000 Less: Purchase Return 6,200 343,800 By Closing Stock 120,000 To Wages and Salaries 30,000 Add: Accured Wages 5,000 35,000 To Gross Profit 36,200 515,000 515,000 36 2 To Rates 6,000 By Gross Profit Less: Prepaid Rates

Step 1 In the above question we have asked to prepare financial statement of John Brown with the help of given data for the year 20X7 which are as below. Step 2 Trading and Profit & Loss Account of John Brown For the year ending 31st December 20x7 Particulars Amount in £ Particulars Amount in £ To Opening Stock 100,000 By Sales 400,000 To Purchases 350,000 Less: Sales Return 5,000 395,000 Less: Purchase Return 6,200 343,800 By Closing Stock 120,000 To Wages and Salaries 30,000 Add: Accured Wages 5,000 35,000 To Gross Profit 36,200 515,000 515,000 36 2 To Rates 6,000 By Gross Profit Less: Prepaid Rates

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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