Question

cash sales 1.5 times of credit sales, credit sales 120000, purchases 140000, rate of gross profit 25% on cost. What is the value of closing stock?

Answer 1

Closing Stock = 100,000

Explanation:

Given:

Credit sales = 120,000

Purchase = 140,000

Cash sales = 1.5 times of credit sales = 1.5 × 120,000 = 180,000

Gross profit = 25% on cost

Computation:

Total sales = Cost of goods sold + Gross profit

Credit sales + Cash sales = Cost of goods sold + 25% of Cost of goods sold

120,000 + 180,000 = Cost of goods sold + 0.25 Cost of goods sold

300,000 = 1.25 Cost of goods sold

Cost of goods sold = 240,000

Cost of goods sold = Opening Stock + Purchase - Closing Stock

240,000 = 0 + 140,000 - Closing Stock

Closing Stock = 100,000

Note: Assume there is no Opening stock

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