What is the net profit for 2016 given the following information?

A) $22 000
B) $27 000
C) $32 000
D) None of the answers provided

Question

What is the net profit for 2016 given the following information?

A) $22 000 
B) $27 000 
C) $32 000 
D) None of the answers provided

Quizplus · Accepted Answer

Net profit is calculated using the formula:
Total revenue - Total expenses = Net profit

Total revenue = cash sales + credit sales = $10,000 + $30,000 = $40,000
Total expenses = wages paid + wages owing at year-end = $8,000 + $5,000 = $13,000
Cash received from accounts receivable is not included in the calculation as it is already a part of the credit sales figure.

Therefore, net profit = $40,000 - $13,000 = $27,000.

Hence, the answer is B, $27,000.

What Is the Net Profit for 2016 Given the Following