(a)Distinguish between Authorized Capital and Called-up Capital (b) Use the following information to answer the questions that follow: XYZ Limited is a trading company. The following transactions took place in the month of February: Purchase of goods - 32 suitcases at N3,500 each 42 shirts at N800 each.Additional information: (i) The cost of transporting goods to the firm's premises was #2,500 (ii) Two workers of the firm were paid wages and salaries of 4,500 each. (iii) Total sales revenue was N180,000. You are required to calculate the: (a) gross profit (b) net profit.
Explanation
(a) The authorized capital is the maximum amount of shares that a company is empowered to issue while caller up capital is the part of the issued capital that the company has asked the subscribers to pay. (b) Purchases N Sales 180,000 Suitcases 32 x 3500 112,000 Shirts 42 x 800 33,600 145,600 Carriage Inward 2,500 Cost of goods sold 148,100 Cost profit 31.900 180,000 180,000 Wages & Salaries 4500 x 2 9,000 Gross profit 31,900 Net profit 2,9002 31,900 31,900.
