Sure, I'd be happy to lay out a detailed, step-by-step solution for this problem.
### Step-by-Step Solution:
1. Calculate Gross Profit:
Gross profit is determined as the difference between sales and purchases.
[tex]\[ \text{Gross Profit} = \text{Sales} - \text{Purchase} \][/tex]
Given data:
- Sales: Rs. 6,00,000
- Purchase: Rs. 5,16,000
Substitute the values:
[tex]\[ \text{Gross Profit} = 6,00,000 - 5,16,000 = 84,000 \][/tex]
Hence, the Gross Profit = Rs. 84,000
2. Calculate Net Profit:
Net profit is calculated by adjusting the gross profit with other incomes and expenses.
Income Components:
- Rent received: Rs. 30,000
- Rent receivable: Rs. 51,000
- Commission earned: Rs. 8,000
Expense Components:
- Salary and wages: Rs. 31,500
- Publicity expenses: Rs. 10,500
- Prepaid insurance expired (insurance expense): Rs. 4,500
- Write-off bad debt (bad debt expense): Rs. 10,000
Net profit is derived by adding all incomes to the gross profit and subtracting all expenses:
[tex]\[ \text{Net Income} = \text{Gross Profit} + \text{Rent Received} + \text{Rent Receivable} + \text{Commission Earned} \][/tex]
Incorporate the given values:
[tex]\[ \text{Net Income} = 84,000 + 30,000 + 51,000 + 8,000 \][/tex]
[tex]\[ \text{Net Income} = 1,73,000 \][/tex]
Now, deduct the expenses from the net income:
[tex]\[ \text{Net Profit} = 1,73,000 - \text{(Salary and Wages + Publicity Expenses + Insurance Expense + Bad Debt Expense)}\ ]
Sum the expenses first:
\[ \text{Expenses} = 31,500 + 10,500 + 4,500 + 10,000 = 56,500 \][/tex]
Now, calculate the net profit:
[tex]\[ \text{Net Profit} = 1,73,000 - 56,500 = 1,16,500 \][/tex]
Hence, the Net Profit = Rs. 1,16,500
### Summary:
- Gross Profit: Rs. 84,000
- Net Profit: Rs. 1,16,500
