The following balances were extracted from the accounting records of Kene Manufacturing Enterprise for the year ended 31st December 2025:
| Financial Item | Amount (₦) |
|---|---|
| Sales of finished goods | 500,000 |
| Opening inventory of finished goods | 40,000 |
| Cost of goods produced | 280,000 |
| Closing inventory of finished goods | 50,000 |
What is the gross profit of the enterprise for the year?
- ₦230,000Answer
- B₦220,000
- C₦210,000
- D₦130,000
Answer
The gross profit of Kene Manufacturing Enterprise for the year is ₦230,000.
The gross profit is calculated by subtracting the Cost of Goods Sold from Sales. The Cost of Goods Sold is ₦40,000 + ₦280,000 - ₦50,000 = ₦270,000. Subtracting this from Sales of ₦500,000 gives ₦230,000.
Step-by-Step Solution
Key Concept
Calculation of Gross Profit in the Trading Account of a Manufacturing Entity
Estimated Time:1m 0s