Sai Baba made sales of N10,000 having computed his gross profit % to sales to be 20. His opening stock was N250 and ending stock is N200. Calculate his purchases.
-
A.
N7950 -
B.
N8050 -
C.
N7050 -
D.
N8950
Correct Answer: Option A
Explanation
The gross profit percentage of sales would be
20% x N 10,000 = N 2000
If cost of sales + gross profit = N 10,000 = N 2000
:. N 8000 + N 2000 = N 10,000
If cost of goods available for sales less closing stock
= cost of sales
:. N8200 + N200 = N8000
Hence; cost of goods available for sale = opening stock + purchases
:. N8200 = N250 + A
= N 8200 – N 250
=N 7950