Question

71. From the following information, calculate value of Opening Inventory:
Closing Inventory 68,000
Total Sales 4,80,000 (including Cash Sales * 1,20,000)
Total Purchases 3,60,000 (including Credit Purchases ? 2,39,200)
Goods are sold at a profit of 25% on cost.

[Opening Inventory = 92,000]​

Answer 1

Explanation:

Consider,

Cost of Goods Sold = x

Net Sales= Cost of Goods Sold + Gross profit

4,80,000 = x+25% of x

4,80,000 = x + 25/100x

4,80,000 = x + 0.25x

4,80,000 = 1.25x

x = 4,80,000/1.25

x = 3,84,000

COGS = 3,84,000

Gp = 25% on cost = 96,000

cost of goods sold = opening stock + purchases - closing stock

3,84,000 = opening stock + 3,60,000 - 68,000

3,84,000 = opening stock + 2,92,000

opening stock = 3,84,000 - 2,92,000

Hence,

opening stock = 92,000

Answer 2

Answer:

Value of Opening Inventory = 92,000

Explanation:

Solution :

Let,

Cost Of Goods Sold = x

Net Sales = Cost Of Goods Sold + Gross Profit

$\longrightarrow$ 4,80,000 = x + 25% of x

$\longrightarrow \: 4,80,000 \: = \: x \: + \: \dfrac{25x}{100}$

$\longrightarrow \: x \: + \: \dfrac{1}{4}x \: = \: 4,80,000$

$\longrightarrow \: \dfrac{5}{4} \: x \: = \: 4,80,000$

$\longrightarrow \: x= \: 480000 \: \times \left(\dfrac{4}{5}\right)$

$\longrightarrow \: x \: = \: \dfrac{480000\times 4}{5}$

$\longrightarrow \: x \: = \: \dfrac{1920000}{5}$

$\longrightarrow \: x \: = \: 384000$

Cost Of Goods Sold = 3,84,000

Gross Profit = 25% on Cost

$\longrightarrow$ 25% on Cost (25% on 3,84,000) = 96,000

Cost Of Goods Sold = Opening Inventory + Purchases - Closing Inventory

$\longrightarrow$ 3,84,000 = Opening Inventory + 3,60,000 - 68,000

$\longrightarrow$ 3,84,000 = Opening Inventory + 2,92,000

$\longrightarrow$ 3,84,000 - 2,92,000 = Opening Inventory

$\longrightarrow$ 92,000 = Opening Inventory

∴ Value of Opening Inventory = 92,000