Question

Calculate cost of goods sold and closing stock from the following: Sales Rs 5,40,000 ; sales returns Rs 16,000 ; Gross Profit Rs 1,20,000 ; Opening Stock Rs 20,000 ; Purchases Rs 4,00,000 ; Purchases Return Rs 4,000 ; Carriage Inward Rs 15,000

Answer 1

ANSWER :

• ❖ If Sales is Rs. 5,40,000; Sales Returns is Rs. 16,000; Gross Profit is Rs. 1,20,000; Opening Stock is Rs.20,000; Purchases is Rs. 4,00,000; Purchases Return is Rs. 4,000 and Carriage Inward is Rs. 15,000; then the Cost of Goods Sold is Rs. 4,04,000 and Closing Stock is Rs. 27,000.

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SOLUTION :

❒ Given :-

• Sales = Rs. 5,40,000

• Sales returns = Rs. 16,000

• Gross Profit = Rs. 1,20,000

• Opening Stock = Rs. 20,000

• Purchases = Rs. 4,00,000

• Purchases Return = Rs. 4,000

• Carriage Inward. Rs 15,000

❒ To Find :-

• Cost of Goods Sold = ?

• Closing Stock = ?

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❒ Calculation of Cost of Goods Sold :-

We know that,

• ★ Gross Profit = Net Sales - Cost of Goods Sold

➜ Cost of Goods Sold = Net Sales - Gross Profit

Now,

• Sales = Rs. 5,40,000

• Sales Returns = Rs. 16,000

∴ Net Sales = Sales - Sales Returns

➞ Net Sales = Rs. 5,40,000 - Rs. 16,000

➞ Net Sales = Rs. 5,24,000

We have,

• Net Sales = Rs. 5,24,000

• Gross Profit = Rs. 1,20,000

★ Cost of Goods Sold = Net Sales - Gross Profit

➨ Cost of Goods Sold = Rs. 5,24,000 - Rs. 1,20,000

∴ Cost of Goods Sold = Rs. 4,04,000 ✪

• ✎ Hence, the Cost of Goods Sold is Rs. 4,04,000.

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❒ Calculation of Closing Stock :-

We know that,

• ★ Cost of Goods Sold = Opening Stock + Net Purchases + Direct Expenses - Closing Stock

➜ Closing Stock = Opening Stock + Net Purchases + Direct Expenses - Cost of Goods Sold

Now,

• Purchases = Rs. 4,00,000

• Purchases Return = Rs. 4,000

∴ Net Purchases = Purchases - Purchases Returns

➞ Net Purchases = Rs. 4,00,000 - Rs. 4,000

➞ Net Purchases = Rs. 3,96,000

We have,

• Opening Stock = Rs. 20,000

• Net Purchases = Rs. 3,96,000

• Direct Expenses = Rs. 15,000 (Carriage Inward)

• Cost of Goods Sold = Rs. 4,04,000

★ Closing Stock = Opening Stock + Net Purchases + Direct Expenses - Cost of Goods Sold

➨ Closing Stock = Rs. 20,000 + Rs. 3,96,000 + Rs. 15,000 - Rs. 4,04,000

➨ Closing Stock = Rs. 4,31,000 - Rs. 4,04,000

∴ Closing Stock = Rs. 27,000 ✪

• ✎ Hence, the Closing Stock is Rs. 27,000.