Question

Calculate Opening and Closing Inventory from the following information: (3) Total Revenue from Operations ₹6,30,000
Sales Return ₹30,000
Gross Profit = 25% on Revenue from Operations
Inventory Turnover Ratio = 5 times
Closing Inventory is ₹12,000 more than the Opening In

Answer 1

Explanation:

Given,

Total sales= 630000

sales return= 30000

Gross profit=25%

I.T.R =5 times

Now,

Net sales = Total sales- sales return

Net sales= 630000-30000

net sales= 600000

then, Gross profit= 600000÷25%

gross profit= 150000

COGS = Net sales - G.P

COGS = 600000-150000

COGS = 450000

We know that,

inventory turnover ratio = COGS/ Average stock

Inventory turnover ratio= 450000/Average stock

5 = 450000/average stock

Average stock =450000÷5

Average stock= 90000

Let opening inventory be x

and closing inventory because x+12000

Again,

Average stock= opening inventory + closing invent/2

Average stock = x+x+12000÷2

Average stock= 2x +12000/2

90000= 2x+12000/2

180000=2x + 120000

2x= 180000-12000

2x= 168000

x= 168000/2

x= 84000

Now, Here

opening inventory is 84000

closing inventory is 84000+12000= 96000

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Answer 2

Answer:

Opening Inventory = ₹ 84,000

Closing Inventory = ₹ 96,000

Explanation:

Total Revenue from Operations = ₹ 6,30,000

Sales Return = ₹30,000

$\longrightarrow$ 6,30,000 - 30,000 = 6,00,000

Revenue from Operations = ₹ 6,00,000

Gross Profit = 25% on Revenue from Operations

$\longrightarrow$ 6,00,000 × 25/100 = 1,50,000

Gross Profit = 1,50,000

Cost of Revenue from Opreation = Revenue from Operations - Gross Profit

$\longrightarrow$ 6,00,000 - 1,50,000

Cost of Revenue from Opreation = ₹ 4,50,000

Inventory Turnover Ratio = 5 times

★ Inventory Turnover Ratio =

$\sf{\longrightarrow{\dfrac{Cost \: of \: Revenue \: from \: Operation}{Average \: Inventory}}}$

$\sf{\longrightarrow \: 5 \: = \: {\dfrac{450000}{Average \:Inventory}}}$

Average Inventory = 4,50,000 / 5

Average Inventory = 90,000

Let,

• Opening Inventory = x
• Closing Inventory = (x + 12,000)

★ Average Inventory =

$\sf{\longrightarrow{\dfrac{Ope.ning \: Stock \: + \: Closing \: Stock}{2}}}$

$\sf{\longrightarrow \:90,000 \: = \: {\dfrac{x\: + \:(x \: + \: 12,000)}{2}}}$

$\longrightarrow$ 90,000 × 2 = 2x + 12,000

$\longrightarrow$ 1,80,000 = 2x + 12,000

$\longrightarrow$ 1,80,000 - 12,000 = 2x

$\longrightarrow$ 1,68,000 = 2x

$\longrightarrow$ x = 1,68,000 /2

$\longrightarrow$ x = 84,000

Opening Inventory = ₹ 84,000

Closing Inventory = (x + 12,000)

$\longrightarrow$ 84,000 + 12,000

$\longrightarrow$ 96,000

Closing Inventory = ₹ 96,000

Therefore,

• Opening Inventory = ₹ 84,000
• Closing Inventory = ₹ 96,000