Question

ascertain the value of closing stock from the following
opening stock ' 1,20,000
purchase '16,00,000
return inward '40,000
rate of gross profit 40%on sales.​

Answer 1

Answer: The value of closing stock is 1,14,000

Explanation:

Given,

opening stock - 1,20,000

purchase - 16,00,000

return inward - 40,000

rate of gross profit 40%on sales.​

Net Sales= Gross Sales−Sales Return                

=16,00,000−40,000

=15,60,000

So the net sales is 15,60,000

Profit on Sales  =40% on sales                  

$\frac{40}{100} *15,60,000$

$=6,24,000$

So the profit on sales is 6,24,000

Cost of Goods Sold (COGS)  = Net Sales−Profit    

                                                 =15,60,000−6,24,000=9,36,000

Also,

COGS=Opening Stock+ Purchases− Closing Stock

9,36,000=1,20,000+9,30,000−Closing Stock

Therefore, Closing Stock = 10,50,000−9,36,000                                                                                

                                          = 1,14,000

Hence the closing stock is 114000

Meaning of opening and closing stock:

Opening Stock is the quantity and cost of goods that a business has available for purchase or usage at the start of an accounting period. The closing stock may take the shape of finished items, in-process goods (WIP), or raw materials.

How to find closing stock:

Opening Stock + Purchases - Cost of Goods Sold is the formula for Closing Stock, also known as Closing Inventory. The cost of opening inventory, also known as the beginning inventory cost, must be included to the period's purchasing costs. The price of the things that will be offered for sale is this.

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