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JAMB Principles of Accounts 2006 Question 34

Question 34

Branch Accounts

Stock 1/1/2002 ₦40 000
Goods received from head office ₦800 000
Goods returned to head office ₦34 000
Sales ₦916 000
Stock 31/12/2000 ₦72 000
From the data above, determine the cost of goods credited to the head office trading account.

  1. A.₦766 000
  2. B.₦840 000
  3. C.₦734 000
  4. D.₦806 000.
Show the answer and explanation

Answer: A (₦766 000)

Explanation

Goods sent to the branch reduce the head office's own trading stock, so the net goods sent (800 000 − 34 000 = ₦766 000) are credited to the head office trading account.