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Chapter 20

Example 4

Required:

Having completed the trading account in the above example, use the
remaining statement of profit or loss balances from Example 2 to
complete the full statement of profit or loss for the month of May.

Example 4: Solution

Statement of profit or loss
Dr $ Cr $
Inventory at Inventory at
31-May 1 May Nil 31 May 31 May 1,200
31-May Purchases 8,900 31 May Sales 10,200
Carriage
31 May inwards 20
31 May Gross profit c/d 2,480
11,400 11,400
–––––– ––––––
31 May Gross profit b/d 2,480
31 May Expenses:
Wages 170
Rent 80
Advertising 25
Carriage
outwards 25
Net profit to
capital a/c 2,180

2,480 2,480

The statement of profit or loss would then be rearranged and presented in the
standard vertical format.

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