Starlight Sports Club operates a bar for its members. For the financial year ended 31 December 2025, the following information was extracted from its accounting records:
| Item | Amount (₦) |
|---|---|
| Bar takings | 250,000 |
| Opening bar inventory | 30,000 |
| Bar purchases | 160,000 |
| Closing bar inventory | 35,000 |
| Bar staff wages paid | 22,000 |
| Bar electricity paid | 7,000 |
Additional Information:
At 31 December 2025, bar electricity paid in advance amounted to ₦2,000.
Calculate the net profit from bar trading to be transferred to the Income and Expenditure Account.
Answer: 68000 ₦
Answer
The net profit from bar trading transferred to the Income and Expenditure Account is ₦68,000.
The net profit from bar trading is calculated by deducting the cost of goods sold (₦155,000) from total bar takings (₦250,000) to arrive at a gross profit of ₦95,000. Operating expenses specific to the bar, consisting of staff wages (₦22,000) and electricity adjusted for prepayment (₦7,000 - ₦2,000 = ₦5,000), total ₦27,000. Deducting total bar expenses from gross profit gives a net profit of ₦68,000 to be credited to the Income and Expenditure Account.
Step-by-Step Solution
Key Concept
Bar Trading Account Net Profit Determination in Non-Profit Organizations