SATC 2017-2018(1) Final Exam Paper A 8. Compute the cost of goods sold figure wi
ID: 2605513 • Letter: S
Question
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 accountExplanation / Answer
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" .
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