Question

A new firm commenced business on 1st january, 20016 and purchased goods costing rs. 90,000 during the year. A sum of rs. 6,000 was spent on freight inwards. At the end of the year the cost of goods still unsold was rs. 12,000. Sales during the year rs.1,20,000. What is the gross profit earned by the firm

Answer 1

The gross profit earned by the firm is Rs 36000,

Total profit is given as the amount of money left after subtracting all the total costs like costing freight and including unsold goods from the total sales in the year.

Or,  Profit = Total Sales - (Cost of goods + Freight - Unsold goods)

Given, Total sales = Rs 120000

Cost of goods = Rs 90000

Freighting =Rs 6000

Unsold cost of goods = Rs 12000

Putting all these values, we get profit as:

Profit = Rs [120000 - (90000 + 6000 - 12000)]

         = Rs 36000

This is the total profit value.