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JAMB Principles of Accounts 2006 Question 11

Question 11

Stock Valuation

Date | Stock | Qty. (units) | Cost/Price (₦)
July | Bal. b/d | 2 000 | 2.00
Aug. | Purchases | 10 000 | 2.50
Sept. | Purchases | 20 000 | 3.00
Oct. | Sales | 8 000 | 3.50
Nov. | Sales | 23 000 | 4.00
Assuming the closing stock was valued at ₦19 000 at the end of November, what was the gross profit?

  1. A.₦30 000
  2. B.₦50 000
  3. C.₦70 000
  4. D.₦100 000.
Show the answer and explanation

Answer: B (₦50 000)

Explanation

Sales = 8 000 × 3.50 + 23 000 × 4.00 = ₦120 000. Cost of sales = 4 000 + (25 000 + 60 000) − 19 000 = ₦70 000. Gross profit = ₦50 000.