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shan2391:
I m asked to make trading account
i have Opening stock 9500
         Closing stock 17500
         Purchases     22000
         Cash sales    6600
         Credit sales   ?
    The Gross profit margin is 20%
How do i calculate credit sales and gross profit.

Monica:
gross profit margin= gross profit mark up( by subtracting  one from the dominator)

so if gross profit=20%=20/100= 1/5

so the gross profit mark up = 1/4(becuz i subtracted one from the dominator)

now gross profit mark up= Gross Profit/ cost of sales

cost of sales= 9500+22000 -17500=14000

mark up= GP/14000
1/4= GP/14000
GP=3500

NOW GET THE SALES EASILY BY= 3500+14000= 17500

HOPE U UNDERSTOOD ANYTHING!!LOL!!

Monica:
AND if u got the opposite that is they gave u the mark up npt te margin remember this formula

gross profit mark up= gross profit margin( by adding 1 to the dominator)

shan2391:
Thanks a lot and a same type of Q. if markup was 20, sales 60000, opening stock 7800,purchases47100 howd u calculate grossprofit.

Monica:
gross profit mark up= gross profit margin( by adding 1 to the dominator)

mark up= 20%= 20/100= 1/5

so gross profit margin will be 1/6 (remember that i added one)

now gross profit margin= gross profit/sales
1/6                         = GP/60000
GP = 10000

u can then get the closing stock....

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