Answer to Question #199953 in Economics for Winfred Mwongeli

Question

trading and profit 

and loss account for the year ended 31 December 2019:

Ksh. ‘000’ Ksh. ‘000’

Sales 18,500

Less cost of sales:

Opening Stock 4,200

Purchases 5,600

Cost of goods available for sale 9,800

Closing stock (2,400) (7,400)

Gross profit 11,100

Other incomes:

Gain on sale of equipment 120

Interest on savings account (gross) 40

Divided for a quoted company 80

Gain on foreign exchange transactions 100

11,440

Expenditure:

Goodwill amortization 25

Legal expenses 420

Salaries 2,000

Bad debts 500

NSSF contribution 60

General expenses 600

Advertising 300

Staff meals 190

Travelling expenses 180

Donations to a trade association 40

Property rates 45

Depreciation 150

Interest on long term 300

Interest on bank overdraft 80

Insurance premiums 124

Cost of stolen stock 20

Provision for bad and doubtful debts 200

Branch closure costs 100 (5,334)

Net profit 6,106

1. The closing stock on 31 December 2019 was valued at a cost plus a mark up of twenty 

per cent

Answer 1

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