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JAMB Accounts Principles of Accounts 2010 Paper

Question : 18

Total: 48

What is the value of purchases for the year 2008?

Solution:

Concept:

The cost of goods sold formula links opening stock, purchases, and closing stock. Rates and wages are not needed here.

Explanation:

Cost of goods sold is calculated as:

\text{Cost of goods sold} = \text{Opening stock} + \text{Purchases} - \text{Closing stock}

Rearrange to find purchases:

\text{Purchases} = \text{Cost of goods sold} - \text{Opening stock} + \text{Closing stock}

Substitute the values for 2008:

Opening stock

= N4\,200

Closing stock

= N3\,900

Cost of goods sold

= N6\,000

Thus:

\text{Purchases} = N6\,000 - N4\,200 + N3\,900

\text{Purchases} = N1\,800 + N3\,900

\text{Purchases} = N5\,700

Answer:

D. N5 700

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