Paper 3 · June 2010 · Partnership Accounts

A partnership paid railage of $9,600,000 during the year and a further $2,400,000 was still owing at the year end. One sixth of the railage cost was incurred in delivering goods to customers. Calculate the railage that is treated as carriage inwards and charged in the trading account.

Model answer

10000000

Also accepted: 10,000,000, $10,000,000

Explanation

Railage for the year = $9,600,000 paid + $2,400,000 owing = $12,000,000. One sixth of it, $2,000,000, is a delivery cost. The other five sixths, $10,000,000, is carriage inwards.

Derived from ZIMSEC Accounting 9197/3 Paper 3 (Case Study), June 2010, Q1

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