Question

From the following details calculate Direct expenses of Excel Ltd.
Opening stock = 30,000
Purchases = Rs. 90,000
Closing stock = Rs.25,000
Manufacturing expenses = Rs. 30,000
Selling and distribution expenses = Rs 20,000
Administrative expenses = Rs. 10,000
Financial expenses = Rs. 5,000
Sales Rs. 240,000
Gross profit on sale 25%

• A. Rs. 25,000
• B. Rs. 55,000
• C. Rs. 45,000
• D. Rs. 35,000

Answer 1

Answer: (B)

Rs. 55,000

Solution to the given problem is as under:

Trading Account

Particuars Amount Particulars Amount

To Opening Stock 30000 By Sales 240000

To Manufacturing Exp 30000 By Closing Stock 25000

To Purchases 90000

To Direct Exp (balancing) 55000

To Gross Profit 60000

(25% of Sales)

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265000 265000

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Selling & Distribution expenses, Administrative expenses and financial expenses are not part of trading account.