Paper 3 · November 2017 · Incomplete Records

A retailer values her closing inventory at $25 000 at selling price. She fixes her selling prices by marking up the goods by 25% on cost. Calculate the value of the closing inventory at cost.

Model answer

20000

Also accepted: 20 000, $20 000

Explanation

A 25% mark up on cost makes the selling price 1.25 times the cost, so cost = $25 000 / 1.25 = $20 000.

Derived from ZIMSEC Accounting 9197/3 Paper 3 (Case Study), November 2017, Q1

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