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WAEC Financial Accounting 2012 Question 9

Question 9

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 total purchases is

  1. A.GH¢8,700.
  2. B.GH¢7,300.
  3. C.GH¢6,000.
  4. D.GH¢5,300.
Show the answer and explanation

Answer: A (GH¢8,700.)

Explanation

Purchases = cash paid + closing creditors − opening creditors = 8,000 + 2,700 − 2,000 = GH¢8,700.