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WAEC SSCE - Financial Accounting - 1991 (Objective)

Question 1 Report

Use the following information to answer the given question
\(\begin{array}{c|c} & N \\ \hline \text{Stock in hand} & 4,000 \\ \text{Purchases for resale} & 5,000 \\ Sales & 3,500 \\ Margin & \text{20%}\end{array}\)
The closing stock is
Answer Details
To calculate the closing stock, we first need to determine the cost of goods sold (COGS), which is the cost of the items sold during the period. The COGS can be calculated as follows: COGS = Sales / (1 + Margin) = 3,500 / 1.20 = 2,916.67 Next, we can calculate the cost of goods available for sale (COGAS), which is the sum of the stock in hand and purchases for resale: COGAS = Stock in hand + Purchases = 4,000 + 5,000 = 9,000 Finally, we can calculate the closing stock by subtracting the COGS from the COGAS: Closing stock = COGAS - COGS = 9,000 - 2,916.67 = 6,083.33 Therefore, the closing stock is N6,200 (rounded to the nearest hundred). (N6,200) is the correct answer.
Read lesson note on Stock Valuation (JAMB)
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