JAMB Accounts Principles of Accounts 2016 Paper

Concept:Gross profit shows the difference between sales and the cost of goods sold for a department.It is calculated before deduction of operating expenses like salaries and rates expenses.Explanation:Use the formula: Gross Profit = Sales $-$ Cost of Goods Sold.Cost of Goods Sold (COGS) = Opening Stock $+$ Purchases $-$ Closing Stock.For Department K, the values are clearly given and do not need apportionment.Only the rates expense of $1{,}500$ is apportioned, but that is an operating expense and does not affect gross profit.Calculate COGS for Department K:COGS $=$ $2{,}500 + 120{,}000 - 3{,}000$COGS $=$ $119{,}500$.Now find gross profit for Department K:Gross Profit $=$ Sales $-$ COGSGross Profit $=$ $180{,}000 - 119{,}500$Gross Profit $=$ $60{,}500$.Therefore, the correct option is C.Answer:C. $\#60{,}500$