WAEC Commerce 2016 Paper

Concept:Cost of goods sold is the total direct cost of inventory sold by a business during a period.Explanation:The formula used is:$$\text{Cost of goods sold} = \text{Opening stock} + \text{Purchases} - \text{Closing stock}$$Opening stock $= \mathrm{D}5{,}000$Purchases $= \mathrm{D}30{,}000$Closing stock $= \mathrm{D}7{,}000$Sales of $\mathrm{D}55{,}000$ are not used in this calculation.Substitute the given values into the formula:$$\text{Cost of goods sold} = \mathrm{D}5{,}000 + \mathrm{D}30{,}000 - \mathrm{D}7{,}000$$First, add opening stock and purchases:$$\mathrm{D}5{,}000 + \mathrm{D}30{,}000 = \mathrm{D}35{,}000$$Then, subtract closing stock from that total:$$\mathrm{D}35{,}000 - \mathrm{D}7{,}000 = \mathrm{D}28{,}000$$Answer:The cost of goods sold is $\mathrm{D}28{,}000$, which is option D.