Bill, Profit And Loss

Introduction

As everyone cannot produce each and every commodity that he/she uses in the day-to-day life, one has to buy them from companies, firm, stores, shops or individuals. In all these activities, business takes place. So, business is an organised effort of individuals to produce and sell the commodities that satisfies the needs of the society. Every business involves bills, profit, loss etc.

In this chapter, we are going to learn about the bills that we come across in everyday life. Also, we will learn about profit and loss in a transaction of a business.

1. BILL

A bill is a written statement of money that you owe for goods or services

For example, Kothai mother gives kothai 300 to purchase the stationery items like note book, pen, pencil, geometry box etc. kothai purchased some stationery items and brought home the following bill.

From the above bill, we can understand that the bill has the following details.

1. Name of the shop.

2. Serial number of the bill.

3. The list of items purchased.

4. Cost of each item.

5. Total number of items purchased.

6. Date on which the bill is produced.

7. Amount paid for the purchase.

8. Tax details.

9. After the purchase, she has some amount left with her. She wants to verify whether the expenses made by her are correct.

1.2 Verification of Bill

Kothai verifies the above bill as follows:

Item 1. Þ 21 3 = 63 ✔

Item 2. Þ 35 2 = 70 ✔

Item 3. Þ 15 2 = 30 ✔

Item 4. Þ 5 1 = 5 ✔

Item 5. Þ 52 1 = 52 ✔

Total - 220 ✔

Kothai’s father asks some questions about the bill and kothai answers him as follows.

(i) How many notebooks are purchased?

3

(ii) What is the cost of each pen?

₹35

(iii) What is the amount paid for pencils?

₹30

(iv) How much the shopkeeper will give you back if you give 3 currencies of ₹100?

₹80

1.3 Preparation of a Bill

For Example

Arivu purchased the following vegetables from a petty shop.

2 kg of Brinjal @ 12 per kg, 3 kg of Onion @ 16 per kg, 3 kg of Tomato @ 20 per kg and 2 kg of Potato @ 24 per kg.

The shopkeeper of a petty shop doesn’t provide the bill. So, Arivu prepares the bill as follows, which helps him to verify whether he has paid correct amount for the purchase.

Example 1: Ramya purchases some make-up items and gets the following bill.

Observe the bill and answer the following questions.

(i) What is the bill number?

(ii) Mention the date of the bill.

(iii) How many different items were purchased?

(iv) What is the cost of an hair clip?

(v) What is the total cost of the ribbon?

Solution:

(i) The bill number is 100.

(ii) The date of the bill is 15.05.2018.

(iii) There were four different items purchased.

(iv) The cost of 1 hair clip is 15.

(v) The total cost for the ribbon is 36.

Example 2:

Prepare a bill for the following purchases at Aavin sales counter in Coimbatore on 25-06-2018 bearing the Bill number 160.

i. 5 packets Milk khoa of 100 gm @ ₹40 each

ii. 5 packets of Butter Milk @ ₹8 each

iii. 6 packets Milk of 500ml @ ₹25 each

iv. 5 packets Ghee of 100gm @ ₹40 each

Solution:

i. Milk khoa Þ 5 40 = 200

ii. Butter Milk Þ 5 8 = 40

iii. Milk Þ 6 25 = 150

iv. Ghee Þ 5 40 = 200

Total = 590

2. Profit and Loss

In our daily life, we use many commodities like food, clothes, vehicles, books etc. Everything is produced by someone or by a team of people and sold directly to the people or through the dealers. When we buy anything, a dealer charges more than what the manufacturer charges. Because, the dealer invests some money to buy the goods, spends his time to bring them to his place and he wants to earn a bit more money than his investment. The excess money that the dealer collects from the people is called gain or profit. If he is in the situation of collecting less money than what he has paid to the manufacturer due to the urgent need of money or some other reason, he loses some money. This losing of money in his investment is called loss. This process of buying and selling goods involves either profit or loss. We shall discuss this in detail.

Cost Price (C.P.)

A shopkeeper purchases goods from a manufacturer or a supplier. This is called Purchase Price. He also meets out the overhead expenses like transport charges, wages, etc. So, the Cost Price (C.P.) consists of the capital, the cost of raw materials, the labour charges for production, the electricity charges, the transport charges etc.

C.P. = Purchase price + Overhead expenses

For example, ABC Cars, the car manufacturing company buys raw materials for 2, 00,000 per car, pays 70,000 to labourers, 15,000 towards electricity bill, ₹10,000 towards transports.

Therefore, the Cost Price (C.P.) of a car produced is 2, 00,000 + 70,000 + 15,000 + 10,000 = 2, 95, 000.

Note

The shopkeeper may require to spend some amount to bring the purchased commodities, like transport charges, wages to workers, toll fee etc., which come as part of “overhead expenses”.

Marked Price (M.P.)

When a shopkeeper takes the goods from the dealer to his outlet for sales, he has to make profit in his business. So, he marks the price higher than the cost price of the goods. This price is called as Tag price or Marked Price (M.P.).

In the above example, ABC cars likes to make ₹50,000 as its profit. So, it fixes up the Marked Price (M.P.) of the car as 2, 95,000 + 50,000 =

3, 45,000.

Discount

The reduction of cost on the Marked Price for the purpose of attracting the customers or some other reasons is called Discount.

To increase the sales, ABC cars is ready to reduce 5,000 to its customers, who is buying the car. Here the discount is 5,000.

Note

M.R.P. is Maximum Retail Price, which is fixed by the manufacturer. No commodity can be sold beyond this price.

Selling Price (S.P.)

The amount that a customer pays to a commodity, after availing the discount (wherever possible) is called as Selling Price (S.P.).

The Marked Price of the car is 3, 45,000. The S.P. of the car sold by ABC cars is 3, 45,000 5,000 = 3, 40,000. i.e., M.P. Discount = S.P.

From the above discussion we can come to the following conclusions.

· If C.P. < S.P., there is Profit Þ Profit = S.P. C.P.

· If C.P. > S.P., there is loss Þ Loss = C.P. S.P.

· If C.P. = S.P., there is no profit or loss.

· Discount = M.P. S.P. (or) S.P. = M.P. Discount.

· If there is no discount, then M.P. = S.P.

Example 1: Fill up the appropriate boxes in the following table:

Solution:

i. C.P. < S.P. Þ Profit = S.P. C.P. = 60 50 = 10

ii. C.P. > S.P. Þ Loss = C.P. S.P. = 70 60 = 10

iii. Profit = S.P. C.P

Þ 20 = S.P. 100

Þ S.P. = 20 + 100 = 120

iv. Loss = C.P. S.P.

Þ 15 = 80 S.P.

Þ S.P. = 80 15 =65

v. Profit = S.P. C.P

Þ 25 = 70 C.P

Þ C.P. = 70 25 = 45

vi. Loss = C.P. S.P.

Þ 30 = C.P. 100

Þ C.P = 30 + 100 = 130

Example2: A table is bought for `4500 and sold for `4800. Find the profit or loss.

Solution:

Þ C.P. = 4500

Þ S.P. = 4800

Þ Here, C.P. < S.P. Þ Profit = S.P. C.P.

Þ =4800 4500 = 300

Example 3:

A fruit seller bought a basket of fruits for 500. During the transit some fruits were damaged. So, he was able to sell the remaining fruits for 480. Find the profit or loss in his business.

Solution:

Þ C.P. = 500

Þ S.P. = 480

Þ Here, C.P. > S.P. Þ Loss = C.P. S.P. = 500 480 = 20

Example 4:

Pari bought a Motor cycle for 55,000 and he gained 5,500 on selling the same. What is the selling price of the motor cycle?

Solution:

Þ C.P. = 55,000

Þ Profit = 5,500

Þ Profit = S.P. C.P.

Þ 5,500 = S.P. 55,000

Þ S.P.= 5,500 55,000 = 60,500

Example 5:

Manimegalai purchased a house for 25, 52,500 and spent 2, 28,350 for its repair. She sold it for 30, 52,000. Find her gain or loss.

Solution:

Þ C.P. = 25,52,500 + 2,28,350 = 27,80,850

Þ S.P. = 30, 52,000.

Þ C.P. < S.P. Þ Profit = S.P. C.P. = 30, 52,000 27, 80,850 = 2, 71,150.

Example 6:

A man bought 75 Mangoes for ₹300 and sold 50 Mangoes for ₹300. If he sold all the mangoes at the same price, find his profit or loss.

Solution:

Þ If the man bought 75 Mangoes for 300 then, Cost Price of 1 Mango = 300/75 = 4

Þ If 50 Mangoes were sold for 300 then, Selling Price of 1 Mango is 300/50 = 6

Þ ∴ Selling price of 75 Mangoes at the rate of 6 is 75 x 6 = 450

Þ ∴ Selling Price > Cost Price

Þ ∴ Profit = Selling Price Cost Price = 450 300 = 150

Example 7
A fruit seller bought a dozen apples for `84. 2 apples got rotten. If he has to get a profit of `16, find the S.P. of each apple.

Solution:

Þ Cost price of 12 apples = 84.

Þ Since 2 apples got rotten, the number of remaining apples = 10

Þ Since profit is 16, Selling price of 10 apples = C.P. + Profit = 84 + 16 = 100

Þ ∴ Selling price of 1 apple = 100/10 = 10

Example 8:

Wheat is being sold at `1550 per bag of 25 kg at a profit of `150. Find the cost price of the wheat bag.

Solution:

Þ Selling price = 1550

Þ Profit = 150

Þ Profit = S.P. C.P.

Þ 150 = 1550 C.P.

Þ Cost price = 1550 150 = 1400

Example 9:

Barathan offers his customers a discount of ₹50 on each shirt and still makes a profit of ₹100 per shirt. What is the actual cost price of the shirt that is marked @ 800?

Solution:

Þ Discount = 50

Þ Profit = 100

Þ M.P. = 800

Þ S.P. = M.P. Discount

= 800 50

= 750

Þ Profit = S.P. C.P.

`100 = 750 C.P.

Þ C.P. = 750 100

= 650

Example 10:

Mani buys a gift article for ₹1500. He wants to sell it at a profit of ₹150 on sales and he marks @ ₹1800. What is the discount that he will give to his customers?

Solution:

Þ C.P. = 1500

Þ Profit = 150

Þ M.P. = 1800

Þ S.P. = M.P. Discount

Þ = 1800 Discount

Þ Profit = S.P. C.P.

150 = 1800 Discount 1500

∴ Discount = 1800 1500 150

= 150