The following details relate to the bar operations of Apex Recreation Club for the year ended 31 December 2025:
- Bar inventory (1 January 2025): ₦12,500
- Bar inventory (31 December 2025): ₦16,200
- Payments to bar suppliers (creditors): ₦64,000
- Amount owing to bar suppliers (1 January 2025): ₦8,400
- Amount owing to bar suppliers (31 December 2025): ₦11,100
- Bar sales (takings): ₦120,000
- Bar steward salary paid: ₦15,000 (₦2,500 was accrued on 31 December 2025)
- Bar license fee paid: ₦4,000 (₦1,000 was prepaid for 2026)
What is the net profit from the bar trading account to be transferred to the Income and Expenditure Account?
Answer: 36500 ₦
Answer
The net profit transferred to the Income and Expenditure Account is ₦36,500.
The net bar profit transferred to the Income and Expenditure account is determined by first computing total credit purchases (₦64,000 + ₦11,100 - ₦8,400 = ₦66,700), then calculating the cost of goods sold (₦12,500 + ₦66,700 - ₦16,200 = ₦63,000) to find the gross profit of ₦57,000 (₦120,000 - ₦63,000). Finally, deducting total adjusted bar expenses (₦17,500 steward salary + ₦3,000 license fee = ₦20,500) leaves a net profit of ₦36,500.
Step-by-Step Solution
Key Concept
Calculation of Net Profit from Bar Operations in Non-Profit Accounting