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WAEC Financial Accounting 1994 Question 5

Question 5

Final Accounts of a Sole Trader

Use the following Trading Account (? marks figures you must work out):
Debit side: Opening Stock ₦1,200; Purchases ?; Add Carriage Inwards ₦300; Less returns outwards ₦1,570; Less closing stock ₦2,220; Gross Profit (25% of sales) ?; Total ₦28,500
Credit side: Sales ₦29,000; Less sales Returns ₦500; Net sales ₦28,500

What is the cost of goods sold?

  1. A.₦19,805
  2. B.₦21,075
  3. C.₦21,375
  4. D.₦21,750
  5. E.₦22,395
Show the answer and explanation

Answer: C (₦21,375)

Explanation

Gross profit = 25% × 28,500 = 7,125; cost of goods sold = 28,500 − 7,125 = ₦21,375.