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JAMB Principles of Accounts 1994 Question 19

Question 19

Stock Valuation

Stock: Cost price (₦), Qty (units)
Opening balance 1/1/90: ₦3.00, 3 000
Purchases January: ₦3.50, 15 000
Purchases February: ₦4.00, 25 000
Sales January: ₦4.50, 13 000
Sales February: ₦5.00, 28 000
What is the gross profit at the end of February, if the closing stock were valued at ₦20 000?

  1. A.₦65 000
  2. B.₦57 000
  3. C.₦48 000
  4. D.₦37 000
Show the answer and explanation

Answer: B (₦57 000)

Explanation

Sales = 13 000 × 4.50 + 28 000 × 5.00 = ₦198 500. Cost of sales = opening 9 000 + purchases (52 500 + 100 000) − closing 20 000 = ₦141 500. Gross profit = 198 500 − 141 500 = ₦57 000.