Question

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 ?

Hint : Rs 16000 is Correct Answer

Can you Please Give Full Explaination & Solution

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Answer 1

Answer:

Cost price 25% to sale price 20% = 20000 × 20 % = 4000.inventory on approval at the end of the year = 20000 - 4000 = 16000.