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JAMB Principles of Accounts 1998 Question 16

Question 16

Final Accounts of a Sole Trader

A pottery company had sales of ₦176,000 during the current period and a gross profit rate of 40%. The company's cost of merchandize available for sale during the period was ₦128,000. The company's ending inventory is

  1. A.₦22,400
  2. B.₦32,000
  3. C.₦51,200
  4. D.₦76,800.
Show the answer and explanation

Answer: A (₦22,400)

Explanation

Cost of sales = 60% × 176 000 = 105 600. Ending inventory = 128 000 − 105 600 = ₦22 400.