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Chapter 4

Q. 4.Act.3

assume that company a has a sales revenue of £10000 for the year. the opening inventory had a value of £2000 and during the year the company made purchases of £6000.

What would be the gross profit if the closing inventory was valued as follows?:
(a) £1500
(b) £2000
(c) £2500

Step-by-Step

Verified Solution

(a) £3500 [£10000 less (2000 + 6000 – 1500)]
(b) £4000 [£10000 less (2000 + 6000 – 2000)]
(c) £4500 [£10000 less (2000 + 6000 – 2500)]