Paper 3 · Inventory valuation
Mr Reedy sells goods at a mark-up of 25% on cost. Goods with a selling price of $6 250 were returned by a customer shortly after the year end, having been invoiced and delivered to the customer before the year end. What was the cost price of these returned goods?
Model answer
$5000
Also accepted: 5000, $5 000, 5 000, $5,000, 5,000
Explanation: Cost = selling price / (1 + mark-up) = 5 000.
Derived from ZIMSEC Accounting Paper 3, June 2019, Q3
