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WAEC Financial Accounting 2020 Question 27

Question 27

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 that would be shown in the balance sheet 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: D (D 18,000.)

Explanation

The balance sheet shows stock at cost (unrealised manufacturing profit removed): 9% × 200,000 = D 18,000.