Question

From the following information determine Gross Profit for the year ended 31st March, 2018

	₹		₹
Opening Stock (1st April, 2017)	25,000	Goods purchased during the year	1,40,000
Freight and Packing	10,000	Closing Stock (31st March, 2018)	30,000
Sales	1,90,000	Packing Expenses on Sales	6,000

Answer 1

Gross Profit	=	Sales + Closing Stock – (Opening Stock + Freight and Packing + Goods Purchased)
	=	1,90,000 + 30,000 – (25,000 + 10,000 + 1,40,000)
	=	2,20,000 – 1,75,000 = Rs 45,000

Alternatively,

Trading Account for the year ended March 31, 2018
Dr.			Cr.
Particulars	Amount (Rs)	Particulars	Amount (Rs)
Opening Stock	25,000	Sales	1,90,000
Purchases	1,40,000	Closing Stock	30,000
Freight and Packing	10,000
Gross Profit (Balancing Figure)	45,000
	2,20,000		2,20,000

Note: Packing Expenses (Rs 6,000) on Sales is an Indirect Expense, therefore it is not considered to compute the amount of Gross Profit.