| N | |
| Debtors opening | 4000 |
| Debtors closing | 1500 |
| Cash received from debtors | 8500 |
| Bad debts written off | 350 |
| Discount allowed | 500 |
| Discount received | 1000 |
A. ₦4,350
B. ₦6,000
C. ₦5,150
D. ₦4,000
Correct Answer:
Option C – ₦5,150
Explanation
If the gross profit is ₦5,000, then the net profit is calculated below;
The item that will appear in the profit and loss account are;
Bad debt written off ₦350, Discount allowed ₦500 and Discount received ₦1,000
| Gross Profit | 5000 | |
| Discount Received | 1000 | 6000 |
| Expenses | ||
| Bad debt. | 350 | |
| Discout Allowed | 500 | 850 |
| Net profit | 5,150 |
Net profit is the profit made after all the expenses incurred are deducted from the gross profit
₦5150 is the net profit calculated i.e bad debt 350 &nplus; discount allowed 500 &nplus; net profit 5,150 less gross profit 5,000 + discount received 1,000
