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WAEC Financial Accounting 2020 Question 26

Question 26

Manufacturing Accounts

Use the following information to answer questions 26 and 27.
A manufacturing company's cost of production was D 200,000. The finished goods were transferred to the warehouse at D 220,000. At the end of the year, 9% of these goods were still in stock.
The value of closing stock of finished goods in the trading account is

  1. A.D 37,800.
  2. B.D 20,000.
  3. C.D 19,800.
  4. D.D 18,000.
Show the answer and explanation

Answer: C (D 19,800.)

Explanation

In the trading account the stock is at transfer value: 9% × 220,000 = D 19,800.