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NDebtors opening4000Debtors closing1500Cash received from debtors8500Bad debts written off350Discount allowed500Discount received1000

If the gross profit is N5 000, what is the net profit?

A.

₦4,350

B.

₦6,000

C.

₦5,150

D.

₦4,000

Correct answer is C

If the gross profit is ₦5,000, then the net profit is calculated below;
The item that will appear in the profit and loss account are;
Bad debt written off ₦350, Discount allowed ₦500 and Discount received ₦1,000

Gross Profit5000Discount Received10006000ExpensesBad debt.350Discout Allowed500850Net profit5,150

Net profit is the profit made after all the expenses incurred are deducted from the gross profit
₦5150 is the net profit calculated i.e bad debt 350 &nplus; discount allowed 500 &nplus; net profit 5,150 less gross profit 5,000 + discount received 1,000