A trader has cost of goods sold of Rs. 280,000 and earns a gross profit equal to 20% of sales. What are the sales?
Correct answer: B. Rs. 350,000
- A. Rs. 320,000
- B. Rs. 350,000
- C. Rs. 375,000
- D. Rs. 400,000
Explanation
If gross profit is 20% of sales, cost of goods sold represents 80% of sales. Therefore, sales equal Rs. 280,000 divided by 0.80, or Rs. 350,000.
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About Incomplete Records
Incomplete records require profit and financial position to be reconstructed when a complete double-entry system is unavailable. Methods include statements of affairs, capital comparisons, control accounts, cash summaries and margin calculations to find missing sales, purchases, expenses, assets, liabilities and drawings, while distinguishing business profit from changes in capital.
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