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WAEC Financial Accounting 1991 (August) Question 4

Question 4

Incomplete Records

Use the following:
Stock in hand: ₦4,000
Purchases for resale: ₦5,000
Sales: ₦3,500
Margin: 20%

The closing stock is

  1. A.₦6,200
  2. B.₦5,500
  3. C.₦5,000
  4. D.₦4,000
  5. E.₦3,500
Show the answer and explanation

Answer: A (₦6,200)

Explanation

Margin 20% of sales: cost of sales = 80% × 3,500 = 2,800; closing stock = 4,000 + 5,000 − 2,800 = ₦6,200.