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

Explanation

Cost = selling price / (1 + mark-up) = $6 250 / 1.25 = $5 000.

Derived from ZIMSEC Accounting Paper 3, June 2019, Q3

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