Question

From the following information, determine Gross Profit for the year ended 31st March, 2019:

	₹		₹
Opening Stock (1st April, 2018)	25,000	Goods purchased during the year	1,40,000
Freight and Packing	10,000	Closing Stock (31st March, 2019)	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 = ₹45,000

Alternatively,

Trading Account for the year ended March 31, 2019
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
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.