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The following information relates to the activities of Inga Candels for the year ended 31 Oct 2022: & multicolumn(1)(|c|)( boldsymbol(E) ) Gross profit & 15,000 Motor vehicle & 2,000 expense & Rent expense & 4,000 Light and Heat & 1,000 Salaries & 3,000 Interest on loan & 1,000 Trade receivable & 500 What is the entity's Net Profit for the period? £ 4,000 £ 5,000 £ 6,000 £ 4,500

Question

The following information relates to the activities of Inga Candels for the year ended 31 Oct 2022:

 & multicolumn(1)(|c|)( boldsymbol(E) ) 
 
Gross 
profit
 & 15,000 
 
Motor 
vehicle
 & 2,000 
expense & 
 
Rent 
expense
 & 4,000 
 
Light and 
Heat
 & 1,000 
 Salaries & 3,000 
 
Interest on 
loan
 & 1,000 
 
Trade 
receivable
 & 500 


What is the entity's Net Profit for the period?
 £ 4,000 
 £ 5,000 
 £ 6,000 
 £ 4,500

The following information relates to the activities of Inga Candels for the year ended 31 Oct 2022: & multicolumn(1)(|c|)( boldsymbol(E) ) Gross profit & 15,000 Motor vehicle & 2,000 expense & Rent expense & 4,000 Light and Heat & 1,000 Salaries & 3,000 Interest on loan & 1,000 Trade receivable & 500 What is the entity's Net Profit for the period? £ 4,000 £ 5,000 £ 6,000 £ 4,500

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Answer

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HarryProfessional · Tutor for 6 years

Answer

For the final answer, put the given figures from the statement into the formula as follows,<br /><br />Net Profit = Substituting these values we get;<br />Net Profit = £15,000 - (£2,000 + £4,000+ £1,000 + £3,000 + £1,000)<br />Net Profit = £15,000 - £11,000<br />Net Profit = So the Net profit of Inga Candels for the year that ended on October 31, most likely to be £4,000.

Explain

## Step 1:<br />Identify the profit and expense items to calculate Net Profit.<br />Looking over the given table we can spot the following: <br /><br />Gross Profit which is our income therefore added to the profit. <br /><br />Motor Vehicle Expenses, Rent, Light and Heat Expenses, Salaries and Interest on Loan are all expenses therefore detracted from the Gross Profit to achieve Net Profit. <br /><br />‘Trade Receivable’ is an item that indicates the amount of money owed to a business by its customers, therefore, it's a Balance Sheet item and is not considered in the calculation of the revenue.<br /><br />## Step 2:<br />To calculate the Net Profit we subtract all the expenses from the Gross Profit to get our answer.<br /><br />Based on the items identified above, subtract all expense items from the profit items to find the Net Profit.<br /><br />### Formula: <br />### **Net Profit = Gross Profit - (Motor Vehicle Expense + Rent Expense + Light and heat expense + Salaries La + Interest on loan)**<br /><br />## Step 3:<br />Perform the calculation.
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