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WAEC Financial Accounting 2014 Question 22

Question 22

Incomplete Records

Use the following information to answer questions 21 and 22.
The total sales of a business was GH¢ 2,160,000. The average mark-up for the year was 50%.
The cost of sales is

  1. A.GH¢ 2,160,000.
  2. B.GH¢ 1,440,000.
  3. C.GH¢ 1,080,000.
  4. D.GH¢ 720,000.
Show the answer and explanation

Answer: B (GH¢ 1,440,000.)

Explanation

Cost of sales = sales ÷ 1.5 = 2,160,000 ÷ 1.5 = GH¢1,440,000 (or sales − gross profit = 2,160,000 − 720,000).