Question

calculate Cost of goods Sold from the following information: Opening Stock Rs. 40,000; Net Purchases Rs. 50,000; Net sales Rs. 1,19,000; wages & salaries Rs. 10,000; Rent paid Rs. 15,000; Closing Stock Rs. 15,000​

Answer 1

Answer:

Adjusted Purchases = Opening Stock + Net Purchases – Closing Stock ... Net Purchases, 50,000, Rent Paid, 15,000 ... (Rs). Cost of Goods Sold, 12,10,000, Sales, 15,00,000. Gross Profit (Balancing Figure), 2,90,000.

Answer 2

SOLUTION :

❖ Given :-

• Opening Stock Rs. 40,000

• Net Purchases Rs. 50,000

• Net sales Rs. 1,19,000

• Wages & salaries Rs. 10,000

• Rent paid Rs. 15,000

• Closing Stock Rs. 15,000

❖ To Find :-

• Cost of Goods Sold = ?

❖ Formula :-

Cost of Goods Sold = Opening Stock (Inventory) + Net Purchase + Expenses incurred in connection with purchases and manufacture (Direct Expenses) - Closing Stock

❖ Calculation :-

★ Cost of Goods Sold = Opening Stock (Inventory) + Net Purchase + Expenses incurred in connection with purchases and manufacture (Direct Expenses) - Closing Stock

= Opening Stock + Net Purchase + Wages & Salaries - Closing Stock

= Rs. 40000 + Rs. 50000 + Rs. 10000 - Rs. 15000

= Rs. 100000 - Rs. 15000

= Rs. 85000.

∴ Cost of Goods Sold = Rs. 85000.

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MORE TO KNOW :

• ⍟ Cost of Goods Sold relates with Gross Profit.

• ⍟ Gross Profit is the profit generated from carrying on the basic activity of a business.

• ⍟ The excess of revenue generated over cost of manufacture or purchase of goods is known as Gross Profit.

• ⍟ Gross Profit is excess of Net Sales over the Cost of Goods Sold.

• ⍟ Gross Profit = Net Sales - Cost of Goods Sold.

• ⍟ Net Sales = Sales - Sales Returns.

• ⍟ Net Purchases = Purchases - Purchase Returns.

• ⍟ Cost of Goods Sold = Opening Stock (Inventory) + Net Purchases - Closing Stock.

Or,

• ⍟ Cost of Goods Sold = Opening Stock (Inventory) + Net Purchase + Expenses incurred in connection with purchases and manufacture (Direct Expenses) - Closing Stock.