Question

Calculate Closing stock from the following details
Gross Profit is Rs.6,00,000,
cost of goods sold is 60% of the net sales,
return inward is Rs. 10,000,
opening stock is Rs.20,000,
wages and salaries is Rs.20,000
purchases of Rs. 10,00,00​

GIVE EXPLANATION ALSO

Answer 1

Solution!!

Cost of goods sold (COGS) = 60% of net sales

Gross Profit = Rs 6,00,000

Let net sales be 100.

COGS = 60% of net sales

COGS = 60% of 100

COGS = 60

Gross profit = Net sales - COGS

Gross profit = 100 - 60

Gross profit = 40

When gross profit is 40, net sales = 100

When gross profit equals 1, net sales = 100/40

When gross profit equals 6,00,000, net sales = (100/40) × 6,00,000

Net sales = Rs 15,00,000

Gross profit = Net sales - COGS

Rs 6,00,000 = Rs 15,00,000 - COGS

COGS = Rs 15,00,000 - Rs 6,00,000

COGS = Rs 9,00,000

COGS = Opening Stock + Net Purchases + Direct Expenses - Closing Stock

Rs 9,00,000 = Rs 20,000 + Rs 10,000 + Rs 20,000 - Closing Stock

Rs 9,00,000 = Rs 50,000 - Closing Stock

Closing Stock = Rs 9,00,000 - Rs 50,000

Closing Stock = Rs 8,50,000