Question

Calculation of opening stock and closing stock cost of revenue from operations is 300000 inventory turnover ratio is 6 times.
find out the value of opening stock, if opening stock is 10000 less than the closing stock

Answer 1

If closing stock is 55000 so opening stock is 45000 ie.55000-10000

Answer 2

Opening Stock = 45,000

Closing stock = 55,000

Explanation:

Given:

Revenue from operation = 3,00,000

Inventory turnover ratio = 6 times

Closing stock = A

Opening stock = A - 10,000

Calculation:

Inventory turnover ratio = Revenue from operation / Average inventory

6 = 300000 / Average Inventory

Average Inventory = 3,00,000 / 6

Average Inventory = 50,000

Average Inventory = (Opening Inventory + Closing inventory) / 2

50,000 x 2 = A + A -10,000

1,00,000 = 2A -10,000

1,10,000 = 2A

55,000 = A

Closing stock = 55,000

Opening Stock = A -10,000

Opening Stock = 55,000 - 10,000

Opening Stock = 45,000