Commerce WASSCE (PC 2ND), 2020

Question 8

 

Bayachan Enterprise buys and sells groceries by mail order. The following are details of operation for the month of June 2018.

                                                                       D
Stock            1st June, 2018                             7,500
Purchases                                                     19,500
Sales                                                            36,000
Courier charges                                              5,500
Creditors                                                       4,800
Debtors                                                          5,000
Cash in hand                                                   6,000
Rent of tricycle                                                9,200
Electricity charges                                               500
Stock            30th June, 2018                           8,500

You are required to calculate:

(a)      average stock;

(b)     cost of goods sold;

(c)      working capital;

(d)     net profit.

Observation

 

The question was well attempted by many candidates and their performance was good.

The expected responses to the question include:
          8.(a)   Average Stock
a                             =       Opening stock + Closing stock

2
=       D7,500 + D8,500
b2
   =             16,000            

      

=                 D8,000

 

 

Alternative 1 (b)

          (b)     Cost of Goods Sold
D                       
c          Opening stock                                               7,500  
Add Purchases                                               19,500  
Goods available for sale                               27,000 
d          Less closing stock                                            8,500 
ef          Cost of good sold                                          18,500  

 

 

 

 

 

(c)      Working Capital
                                  = Current assets – Current liability

                   Current assets:                             D
Stock                               8,500 
Debtors                           5,000  
g                             Cash                                6,000 
19,500 
Less Current liabilities:
o                             Creditors                          4,800 
jn                   Working capital                          14,700 

 

 

 

 

Alternative 1 (d)
                                                                            
          (d)                                                        D
                   Sales                                         36,000
                   Less cost of goods sold:
                   Opening stock           7,500
g                   Add: purchases       19,500
                                                 27,000      
g                   Less: closing stock     8,500                                              
g                   Cost of sales                              18,500        
                        Gross profit                           17,500                                
                   Less: expenses:
                   Electricity                      500
                   Courier charges           5,500
gRent of tricycle             9,200     
g                                                15,200          
gg                   Net profit                                    2,300