JAMB Principles of Accounts 2014 Question 10

Question 10

Cash Book

Given:
If Emenike Enterprises settles its suppliers for goods purchased within 7 days, it can earn a cash discount of 12½%. Assuming ₦22,800 worth of goods were purchased and settled within 5 days, what will be the amount to be credited in the cash column of the company's cash book?

  1. A.₦25,650.
  2. B.₦22,800.
  3. C.₦19,950.
  4. D.₦18,240.
Show the answer and explanation

Answer: C (₦19,950.)

Explanation

Discount = 12½% × 22 800 = 2 850. Cash paid = 22 800 − 2 850 = ₦19 950.