2.26 In order to continue the story and show the full picture of the year’s trading by Jane, we will assume that all went according to plan, that she sold a total of fifty windsurfers, that all customers paid for their goods, that there were no warranty claims or damage to the shop, and that Jane did not take any money out of the business. The only change to the plan was that Jane realised that her future did not lie in the City, but in Poole, but trading on a rather larger basis. She therefore awaited the new spring season with relish. She has been advised that incorporation is advisable as she now has rather larger plans. We will also assume that she sold her last windsurfers in November and received the cash in December, together with the full amount of the rental deposit, less the rent for December. The local scrap yard agrees to take her van, now on its last legs, and she is surprised that they offer her £200 for it. Her profit and loss account for the year from January to December is:
Full year
Number sold
50
Sales
50,000
Purchases
35,000
Opening stock
- -
Less: Closing stock
Cost of sales
35,000 ______ 15,000
Gross profit
Overheads: rent
6,000 1,200
Overheads: depreciation
Overheads: profit on sale of van
(200)
_____ 7,000
Total overheads
Net profit/(loss)
8,000
Gross profit %
30%
Net profit %
16%
8
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