Question

Consider the following for Alpha Co. for the year 2009-10: Cost of goods available for sale Rs.1,00,000 Total Sales Rs.80,000 Opening inventory of goods Rs.20,000 Gross profit margin 25% Closing inventory of goods for the year 2009-10 was a) Rs.80,000 b) Rs.60,000 c) Rs.40,000 d) Rs.36,000

Answer 1



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Consider the following for Alpha Co. for the year 2009-10:?

Cost of goods available for sale   Rs.1,00,000 Total Sales  Rs.80,000 Opening inventory of goods  Rs.20,000 Gross profit margin  25%     Closing inventory of goods for the year  2009-10  was ?   a) Rs.80,000 b) Rs.60,000 c) Rs.40,000 d) Rs.36,000

AccountingAuditingCost AccountingFinance



Question added by Shamseer KM , Accounts & Internal Auditing , Taj Al Makhan Trad. & Co
Date Posted: 2015/09/04

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7 Answers



Answer added by Samik Dutta, Business Development Manager , Pulsar Advanced Engineering Technologies
1 year ago

The closing inventory of Rs, pretty much cancels out with the profits (% of Rs,=Rs,). That if the sales is deducted from the 'cost of goods for sale' (Rs1,,).

However, if we look at sales of Rs, as revenue (profits included). Then actual goods sold bear a cost of,. I which case, the opening inventory is Rs, (Op C).

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Answer added by ADITYA SHARMA, Senior Auditor , Deloitte and Touche
3 years ago

the  correct answer for this question is0

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Answer added by Sadiq ul Islam, Senior Accountant , Bindawood Group of Companies
3 years ago

…See moreOption C0 is the correct answer. Cost of goods avaialable for sale (incl. opening balance)   Less: COGS = (0 x%)                                                      (0) Closing Inventory                                                                              0

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Answer added by Deleted user 
3 years ago

c) Rs,40,000................................................................................................................................................  

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Answer added by faiz ahmed faiz muhammad ibrahim 
3 years ago

The answer is option (c). Closing stock of the data provided by you can be found by developing a cost of goods sold (COGS) statement and calculating cost of good sold by using the formula of gross profit margin. The first step is developing the cost of goods sold (COGS) statement, which will go this way: - COGS =  cost of goods available for sale - closing stock. Now in this equation, we have three quantities but have the data available for one quantity and that is the cost of goods available for sale. Here we can determine another variable in the equation, i.e. COGS by using Gross Profit Margin Formula. Now, Gross Profit Margin = (Revenue - COGS) / revenue. By putting values we get,25% = (80,000 - COGS) /80,000. After simplification the result would be, COGS =60,000. So, by using gross profit margin formula we got the second variable to use in the formula of cost of goods sold. Now, by putting the two variables, i.e. COGS and cost of goods available for sale in the given equation we can determine the closing stock. So, we will put the available quantities in the given equation. COGS = cost of goods available for sale - closing stock. By putting values we will get, 60,000 =1,00,000 - closing stock. After simplification the net result would be, closing stock =40,000. So, the answer to the given question is (C). I hope this is the answer of your question.

Answer 2

Answer:

40000

Explanation:

It is given in the question that COST OF GOODS AVAILABLE FOR SALE is 100000 so, it includes purchase 20000 and opening inventory( 100000-20000= 60000 ).

Sales is given as 80000 and margin on sales is 25% , that implies 80000×25/100= 20000 is the profit. so deduct profit from sales i.e

80000-20000=60000 is the cost of sales.

the formula to arrive closing stock is

COST OF GOODS AVAILABLE FOR SALE (COGAS)- COST OF GOODS SOLD (COGS) = CLOSING STOCK

SO 100000-60000 = 40000