Day: April 2, 2020

The following information relates, to a sole trader whose financial year ends on 31 December.

• Sales for the period 1 January – 31 December – £200,000
• Purchases for the period 1 January – 31 December – £130,000
• Stock at 1 January – £50,000
• Percentage mark-up applied on all goods during the period 1 January – 31 December was 25%

The sole trader’s stock as at 31 December, at cost, was?

Select ONE answer:

1. £20,000
2. £26,000
3. £40,000
4. £70,000

 

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – Cost of sales + 25% = £200,000 Therefore, Cost of sales = £160,000. Cost of sales = Opening stock + purchases – closing stock. Therefore, £160,000 = £50,000 + £130,000 – closing stock. Therefore, closing stock = £20,000
2. Not correct
3. Not correct
4. Not correct

 

 

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