Jos Head Office operates a dependent branch in Bauchi, supplying all goods at cost price. For the financial year ended 31 December 2025, the branch records show the following details:
- Opening inventory at branch: ₦15,000
- Goods sent to branch: ₦120,000
- Goods returned by branch to Head Office: ₦8,000
- Total cash sales at branch: ₦150,000
- Closing inventory at branch: ₦22,000
What is the gross profit realized by the Bauchi branch for the year?
- ₦45,000Cevap
- B₦29,000
- C₦23,000
- D₦75,000
Cevap
The gross profit realized by the Bauchi branch for the year is ₦45,000.
To calculate the gross profit for a dependent branch accounted for at cost price, first find the cost of goods available for sale by adding opening inventory (₦15,000) to goods sent (₦120,000) and subtracting goods returned to Head Office (₦8,000), giving ₦127,000. Next, subtract closing inventory (₦22,000) to get the cost of goods sold of ₦105,000. Finally, deduct cost of goods sold from total cash sales (₦150,000) to obtain a gross profit of ₦45,000.
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Anahtar Kavram
Branch Trading Account at Cost Price