To find the figure for purchases, we need to use the formula:
Beginning Inventory + Purchases - Ending Inventory = Cost of Goods Sold
We are given the following information:
Beginning Inventory = 80% of Sales
Ending Inventory = ₦4,800
Sales = ₦12,800
Cost of Goods Sold = Sales - Gross Profit
We are not given the figure for Gross Profit, but we can calculate it using the given information:
Gross Profit = Sales - Cost of Goods Sold
Gross Profit = Sales - (Beginning Inventory + Purchases - Ending Inventory)
Gross Profit = ₦12,800 - (80% of Sales + Purchases - ₦4,800)
Gross Profit = ₦12,800 - (0.8 x ₦12,800 + Purchases - ₦4,800)
Gross Profit = ₦12,800 - (₦10,240 + Purchases - ₦4,800)
Gross Profit = ₦7,360 - Purchases
We are also given that the Gross Profit is ₦5,900, so we can substitute this value and solve for Purchases:
₦5,900 = ₦7,360 - Purchases
Purchases = ₦7,360 - ₦5,900
Purchases = ₦1,460
Therefore, the figure for purchases is ₦1,460. The correct option is not among the options given.