SATC 201720181 Final Exam Paper A 8 Compute the cost of good

SATC 2017-2018(1) Final Exam Paper A 8. Compute the cost of goods sold figure with the following information: Sales £9,000, Opening inventory £1,100, Closing inventory £950, Purchases £7,300, Returns inwards £450, Carriage inwards £300 A. £7,000 B. £7,300 C. £7,4so D. £7,750 9. A firm bought a machine for £3,200. It is to be depreciated at a rate of 25 percent using the reducing balance method. What would be the remaining book value after two years? ( A. £1,600 B. £2,400 C. £1,800 D. Some other figure 10. If you want to transfer the balance of purchases account to a profit account to calculate gross profit, you should A. Debit purchases account, Credit trading account B. Debit trading account, Credit purchases account C. Debit purchases account, Credit profit and loss account D. Debit profit and loss account, Credit purchases account

Solution

8) The correct choice is D

Cost of goods sold = Opening inventory + Purchases + Carriage inwards - Closing inventory

Cost of goods sold = 1,100 + 7300 + 300 - 950

Cost of goods sold = 7,750

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9) The correct choice is C

Annual depreciation for year 1 = 0.25 * 3200

Annual depreciation for year 1 = 800

Book value at end of year 1 = 2400

Annual depreciation for year 2 = 0.25 * 2400

Annual depreciation for year 2 = 600

Book value at end of year 2 = 1800

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10) The correct choice is A

Explanation : - Accounts related to goods such as purchase account is closed by transferring the balance by crediting \" trading account\" .