Activity Worksheet 2
Profit and Loss Account Activity
Carpenter's Cars manage their accounts on a monthly basis. It is your task to prepare a Profit and Loss Account for the month of July.
You need to use this worksheet in conjunction with your "Carpenter's Cars" Excel spreadsheets: DATABASE.XLS and PLA.XLS. You can download these from this link. Once you have the spreadsheets open them in Excel and follow the instructions given to you on screen. Use this worksheet along with the spreadsheet - PLA.XLS -where requested. Call up PLA.XLS from your disk. You will see that a pro forma PLA has been prepared. Using the information below, complete the PLA.
N.B. Where you see # in the spreadsheet a figure should be inserted. The grey boxes indicate that a formula is required. Click on the ? for help with working out the formulas.
The following data has been given:
- During July, five cars were sold for a total of £27,830. These cars were originally purchased for £22,264 - giving Carpenter's Cars a 20% profit margin.
- At the beginning of the month the stock of cars were valued at £216,344.
- During July, Carpenter's Cars purchased four cars from an auction for a total of £10,000.
- Carpenter's Cars incurred expenses throughout the month as follows:
Maintenance £1080
Wages £1000
Rent and Rates £800
Administration £150
N.B. In order to calculate the Cost of Goods Sold, you will need to find the closing stock figure. Your closing stock figure will equal:
opening stock + purchases - sales at cost price (i.e. what was paid for them)
Profit & Loss Account Activity
Once you have done the Carpenter's Cars Profit and Loss account try and work out the answers to the following questions.
| SARAH'S GIFT SHOP | ||||
| Profit and Loss account for the year ending 31 May 1997 | ||||
| £ | £ | |||
| Wages | 15.000 | Gross profit | 42.000 | |
| Rent, rates, insurance | 16.000 | |||
| Heat and lighting | 1.000 | |||
| Bad debts | 500 | |||
| Depreciation | ||||
| Equipment and fittings | 400 | |||
| Net Profit | 9.100 | |||
| 42.000 | 42.000 | |||
- In the town where Sarah has her shop there are two other gift shops for sale. One is in a smart shopping centre and has high overheads; its sales are £300,000 with a net profit of £20,500. The other is much smaller with a turnover of £170,000 and net profit of £16,500. Compare Sarah's shop with both of these. Which is a) the most and b) the least profitable?
- What is the main information provided by a profit and loss account?
What is meant by bad debts?