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
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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.
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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.
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.
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