Question

4.) A merchant sends out his goods casually to his dealers on approval basis. All such transactions are,
however, recorded as actual sales and are passed through the sales book. On 31-12-2016, it was found
that 100 articles at a sale price of 200 each sent on approval basis were recorded as actual sales at
that price. The sale price was made at cost plus 25%. The amount of Inventories on approval will be
amounting:

(a). 16,000
(b). 20,000
(c). 15,000
​ Can u pls give the explanation??

Answer 1

Answer:

C)15,000

Explanation:

The answer with explanation is with attachment please read.

Answer 2

Answer:

(a)

Explaition :

cost price 25% (given)

and sale price 200×100=20000 (given)

so,

The amount of inventory on approval basis =20000 ×100/125 =16000 .

The answer is option (a) .