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If the opening stock is 5% of sales. calculate the purchases

Accounts - Principles of Accounts
JAMB 2009

If the opening stock is 5% of sales. calculate the purchases

  • A. N95,600
  • B. N95,000
  • C. N90,600
  • D. N85,000
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Correct Answer: Option C
Explanation

opening stock + cost of goods sold - closing stock = purchase

Remember COGS was given as;

cost of goods sold = sales - profit (10% of sales)

100,000 - 10,000 = 90,000

Hence we have;

purchase = 5,000 + 90000 - 5,600 = 90,600


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