The following financial information was extracted from the records of Golden Star Recreation Club regarding its bar trading operations for the year ended 31st December 2025:
| Transaction / Account Details | Amount (₦) |
|---|---|
| Bar sales receipts | 95,000 |
| Bar inventory (1st January 2025) | 14,000 |
| Bar inventory (31st December 2025) | 18,000 |
| Payments to bar suppliers | 48,000 |
| Bar creditors (1st January 2025) | 6,000 |
| Bar creditors (31st December 2025) | 9,000 |
| Bar steward wages paid | 10,000 |
| Bar steward wages accrued (31st December 2025) | 3,000 |
What is the net profit from the bar trading activity to be transferred to the Income and Expenditure Account for the year?
- ₦35,000Answer
- B₦41,000
- C₦17,000
- D₦34,000
Answer
The net profit from the bar trading account to be transferred to the Income and Expenditure Account is ₦35,000.
The net profit of ₦35,000 is correctly calculated by first determining total purchases (₦48,000 paid + ₦9,000 closing creditors - ₦6,000 opening creditors = ₦51,000), computing cost of sales (₦14,000 opening stock + ₦51,000 purchases - ₦18,000 closing stock = ₦47,000), obtaining gross profit (₦95,000 sales - ₦47,000 cost of sales = ₦48,000), and deducting total bar steward expenses (₦10,000 paid + ₦3,000 accrued = ₦13,000).
Step-by-Step Solution
Key Concept
Bar Trading Account Profit Determination in Non-Profit Organizations