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WAEC Accounting 2020 Paper

Question : 17

Total: 40

A trader adds 25% on cost as profit. The profit on sales of \$300,000 would be

Solution:

Concept:

Profit is calculated as a percentage of cost price, so sales price is the sum of cost and profit.

Explanation:

Let the cost price be

C

A profit of

25\%

on cost means profit

= 0.25C

Therefore, sales

= C + 0.25C = 1.25C

Given sales

= \$300{,}000

, we write

1.25C = 300{,}000

Solving for cost:

C = \frac{300{,}000}{1.25} = \$240{,}000

Profit

= 0.25 \times 240{,}000 = \$60{,}000

Thus, the profit on sales of

\$300{,}000

\$60{,}000

Answer:

\$60{,}000

, which is option B.

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