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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
I am not understanding how the gross profit and net profit is calculated in this question
![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
To Rates
36 A
6,000
By Gross Profit
Less: Prepaid Rates](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F93c376df-4906-4de6-8958-acf9df1ede05%2F40429146-3deb-4da5-a2cc-d93b48da3de6%2F9mfxoni_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
To Rates
36 A
6,000
By Gross Profit
Less: 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 profit
and loss account for the year ended 31 December 20X7, and a balance sheet as at that date, taking
into consideration the adjustments shown below:
Trial Balance as at 31 December 20X7
Dr
Cr
Sales
400,000
Purchases
Sales returns
350,000
5,000
Purchases returns
6,200
Opening stock at 1 January 20X7
Provision for doubtful debts
100,000
800
30,000
6,000
1,000
Wages and salaries
Rates
Telephone
Shop fittings at cost
Van at cost
40,000
30,000
9,800
200
Debtors and creditors
7,000
Bad debts
Capital
Bank balance
179,000
3,000
18,000
593,000
Drawings
593,000
(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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F93c376df-4906-4de6-8958-acf9df1ede05%2F40429146-3deb-4da5-a2cc-d93b48da3de6%2Fx7gqk17_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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 profit
and loss account for the year ended 31 December 20X7, and a balance sheet as at that date, taking
into consideration the adjustments shown below:
Trial Balance as at 31 December 20X7
Dr
Cr
Sales
400,000
Purchases
Sales returns
350,000
5,000
Purchases returns
6,200
Opening stock at 1 January 20X7
Provision for doubtful debts
100,000
800
30,000
6,000
1,000
Wages and salaries
Rates
Telephone
Shop fittings at cost
Van at cost
40,000
30,000
9,800
200
Debtors and creditors
7,000
Bad debts
Capital
Bank balance
179,000
3,000
18,000
593,000
Drawings
593,000
(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.
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