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WAEC Financial Accounting 2012 Question 10

Question 10

Incomplete Records

Use the following information to answer questions 9 and 10.
Stocks: 1/1/10 GH¢1,400; 31/12/10 GH¢1,900
Creditors: 1/1/10 GH¢2,000; 31/12/10 GH¢2,700
Cash paid to trade creditors: GH¢8,000
Mark-up on cost of sales: 20%
The cost of sales is

  1. A.GH¢8,200.
  2. B.GH¢6,800.
  3. C.GH¢5,500.
  4. D.GH¢4,800.
Show the answer and explanation

Answer: A (GH¢8,200.)

Explanation

Cost of sales = opening stock + purchases − closing stock = 1,400 + 8,700 − 1,900 = GH¢8,200.