The year-end Trial Balance of a trader includes the balances stated on the right. 75% of carriage is for delivering goods to customers. The cost of closing inventory has been ascertained to be £185,000. However, it includes £36,000 as the cost of shop-soiled goods. If cleaned at a cost of £1,800 these goods could be sold for £15,000. Ascertain the trader’s gross profit for the year and the value at which closing inventory should be reported on the year-end Statement of financial position.

(a) Gross profit £209,200 and Inventory value £162,200

(b) Gross profit £139,200 and Inventory value £162,200

(c) Gross profit £162,000 and Inventory value £185,000

(d) Gross profit £139,200 and Inventory value £198,200

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Opening inventory Purchases Sales Carriage £128,000 £594,000 £790,000 £84,000