The following information is available from the trial balance of Valentines company as at 31 Dec Year 3:
$$\begin{array} { l c c }
& \text { Debit } & \text { Credit } \
& £ & £ \
\text { Sales revenue } & & 110,000\
\text { Inventory at 31st Dec Year 1 } & 7,000 \
\text { Purchases } & 18,750 &
\end{array}$$
Closing inventory as at 31st Dec year 3 is £5,250.Calculate the gross profit.

Question

The following information is available from the trial balance of Valentines company as at 31 Dec Year 3:
$$\begin{array} { l c c } 
& \text { Debit } & \text { Credit } \
& £ & £ \
\text { Sales revenue } & & 110,000\
\text { Inventory at 31st Dec Year 1 } & 7,000 \
\text { Purchases } & 18,750 &
\end{array}$$
Closing inventory as at 31st Dec year 3 is £5,250.Calculate the gross profit.

Quizplus · Accepted Answer

Gross Profit = Net Sales - Cost of Goods Sold 
= 385,500 - (159,000 + 5,250) 
= £221,250 - £164,250 
= £57,000 
Therefore, the gross profit is £57,000. The closest answer option is C) £89,500.

The Following Information Is Available from the Trial Balance of Valentines