Commerce WASSCE (PC 2ND), 2022

Question 8

 

(a)      Explain the following trade terms as written on an invoice
          (i)      5% trade discount;
          (ii)      10% cash discount;
          (iii)     2% net 30days.

 

(b)     The following information was extracted from the books of Dalempa limited as at 31st December, 2021.

                                                             
Stock (01/01/21)                                 30,000.00
Receivables                                         50,000.00
Overdraft                                            15,000.00
Cash at hand                                       40,000.00
Stock (31/12/21)                                 20,000.00
Cash at bank                                       25,000.00

 

You are required to calculate the following as at 31/12/21:

(i)      current assets;
(ii)      current liabilities;
(iii)     working capital;
(iv)     average stock.

Observation

 

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

The expected responses to the question include:

 

          (a)      Explanation of terms

  1. 5% trade discount is a reduction of 5% on the invoice value to allow the buyer to make profit.
  2. 10% cash discount is a reduction of 10% on the invoice value if the buyer pays cash.

N.B. Ignore 8(a)iii