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Solution for Accounting for Managers: Interpreting Accounting Information for Decision-Making 2nd Edition Chapter 8, Problem 1

by Paul M. Collier
158 Solutions 15 Chapters 26259 Studied ISBN: 9780470016091 Management Information Systems 5 (1)

Chapter 8, Problem 1 : 8.1 National Retail Stores has identified the following...

8.1 National Retail Stores has identified the following data from its accounting records for the year ended 31st December: sales £1,100,000; purchases £650,000; expenses £275,000. It had an opening stock of £150,000 and a closing stock of £200,000. Based on this information, the gross profit and operating profit/loss is:

a)a gross profit of £450,000 and an operating profit of £185,000

b)a gross profit of £500,000 and an operating profit of £225,000

c)a gross profit of £400,000 and an operating profit of £125,000

d)a gross profit of £500,000 and an operating loss of £185,000

Step-By-Step Solution

8.1 National Retail Stores has identified the following data from its accounting records for the year ended 31st December: sales £1,100,000; purchases £650,000; expenses £275,000. It had an opening stock of £150,000 and a closing stock of £200,000. Based on this information, the gross profit and operating profit/loss is:

b) a gross profit of £500,000 and an operating profit of £225,000

 

Sales

 

1,100,000

Less cost of sales

 

 

Opening stock

150,000

 

Purchases

650,000

 

 

800,000

 

- Closing stock

200,000

 

Cost of sales

 

600,000

Gross profit

 

500,000

- Expenses

 

275,000

Operating profit

 

225,000

 

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