Given; Purchases = ₦20,000 Sales = ₦40,000 Carriage inwards = ₦5,000 Carriage outwards = ₦5,000 Opening stock = ₦10,000Closing stock = ₦5,000What is the cos...

Answer Details

To calculate the cost of goods sold, we need to start with the formula: Cost of Goods Sold = Opening Stock + Purchases + Carriage inwards - Closing Stock - The Opening stock is given as ₦10,000 - The Purchases is given as ₦20,000 - The Carriage inwards is given as ₦5,000 - The Closing stock is given as ₦5,000 Substituting these values into the formula, we get: Cost of Goods Sold = 10,000 + 20,000 + 5,000 - 5,000 Cost of Goods Sold = ₦30,000 Therefore, the cost of goods sold is ₦30,000. Explanation: - Cost of Goods Sold refers to the cost of the products sold during a particular accounting period. - To calculate it, we add the cost of the goods purchased to the cost of any additional expenses related to the purchase such as carriage inwards and then subtract the cost of any goods that are still in stock (i.e. the closing stock). - In this case, the opening stock was ₦10,000, and the purchases were ₦20,000. The carriage inwards, which is an additional expense related to the purchase, was ₦5,000. - The closing stock was ₦5,000, which means that ₦5,000 worth of goods were still in stock at the end of the accounting period. - By substituting these values into the formula, we get the cost of goods sold which is ₦30,000.