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JAMB Principles of Accounts 2003 Question 31

Question 31

Departmental Accounts

A company has two departments X and Y. Y transferred goods to X at a profit margin of 25%. ₦10 000 worth of goods was not sold at the end of the accounting period. How much is the unrealized profit?

  1. A.₦2 000
  2. B.₦2 500
  3. C.₦12 000
  4. D.₦12 500
Show the answer and explanation

Answer: B (₦2 500)

Explanation

A 25% profit margin means profit is 25% of the transfer price. Unrealised profit on the unsold goods = 25% × ₦10 000 = ₦2 500.