Question on: JAMB Accounting - 2022
A company has two departments X and Y. Y transferred goods to X at a profit margin of 25%. N10,000 worth of goods was not sold at the end of the accounting period.
How much is the unrealized profit?
N2000
N2500
12000
12500
To calculate the unrealized profit, you need to determine the profit margin on the goods transferred from department Y to X and then find out how much profit would have been recognized if all the goods were sold.
1. Profit Margin = 25% (0.25 in decimal form)
2. Value of goods transferred = N10,000
3. Profit on transferred goods = Profit Margin * Value of goods transferred
= 0.25 * N10,000
= N2,500
Since N10,000 worth of goods was not sold, the unrealized profit is the same as the profit on those unsold goods, which is N2,500
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