A business has a rate of return of seven times. At one time the business had an average stock of sh 142,000. The trade discounts allowed was 33.3% of all selling prices to retailers of gross profit. Calculate;
(a) cost of goods sold
(b) gross profit
(c) turnover
(d) total expenses
N/B. Please it is urgently needed from 10 minutes from now Help please
To calculate the various values, we need to use the formulae and information provided. Let's break it down step by step:
(a) Cost of Goods Sold (COGS):
To calculate the COGS, we need to subtract the gross profit from the selling price.
Gross Profit = Selling Price - COGS
Given that the trade discount allowed is 33.3% of all selling prices to retailers of gross profit, we can calculate the selling price:
Selling Price = Gross Profit / (1 - Trade Discount Rate)
In this case, the trade discount allowed is 33.3%, which is equal to 0.333.
Selling Price = Gross Profit / (1 - 0.333)
Now, we have all the information to calculate the COGS. We know the selling price, which is 7 times the COGS, and we know the average stock, which we can use to determine the COGS.
COGS = Average Stock / Rate of Return
COGS = 142,000 / 7
Calculate the COGS using the given rate of return and average stock.
(b) Gross Profit:
We can now calculate the gross profit using the formula mentioned earlier:
Gross Profit = Selling Price - COGS
Substitute the values calculated for selling price and COGS.
(c) Turnover:
To calculate the turnover, we need to divide the COGS by the average stock:
Turnover = COGS / Average Stock
Substitute the values calculated for COGS and average stock.
(d) Total Expenses:
The total expenses are not provided in the question. Therefore, it is not possible to calculate the total expenses with the given information.
Please note that the calculations described above are the steps to solve the problem manually. However, if you have access to a spreadsheet program like Excel or Google Sheets, you can input the formulas directly and get the answers instantly.