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Sai Baba made sales of ₦10,000 having computed his gross profit % to sales to ...


Question

Sai Baba made sales of ₦10,000 having computed his gross profit % to sales to be 20. His opening stock was ₦250 and ending stock is ₦200. Calculate his purchases.

Options

A) ₦7950

B) ₦8050

C) ₦7050

D) ₦8950

The correct answer is A.

Explanation:

The gross profit percentage of sales would be

20% x ₦10,000 = ₦2000

If cost of sales + gross profit = ₦10,000 = ₦2000

:. ₦8000 + ₦2000 = ₦10,000

If cost of goods available for sales less closing stock

= cost of sales

:. ₦8200 + ₦200 = ₦8000

Hence; cost of goods available for sale = opening stock + purchases

:. ₦8200 = ₦250 + A

= ₦8200 – ₦250

=₦7950


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Dicussion (1)

  • The gross profit percentage of sales would be

    20% x ₦10,000 = ₦2000

    If cost of sales + gross profit = ₦10,000 = ₦2000

    :. ₦8000 + ₦2000 = ₦10,000

    If cost of goods available for sales less closing stock

    = cost of sales

    :. ₦8200 + ₦200 = ₦8000

    Hence; cost of goods available for sale = opening stock + purchases

    :. ₦8200 = ₦250 + A

    = ₦8200 – ₦250

    =₦7950

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