Question

Cost of revenue from operations 6,00,000; Inventory Turnover Ratio 5. Find out the value of opening inventory, if opening inventory is 8,000 less than the closing inventory.​

Answer 1

Answer:

cogs= 600000

inventory turnover ratio=cogs/average inventory

5=600000/average inventory

avg inventory= 1,20,000

op+cl/2=1,20,000

op+cl=2,40000

cl-8000+cl=2,40,000

2closing=2,48000

closing=1,24,000

opening=1,24000-8000=116000

Answer 2

Answer:

Explanation:

Solution :

★ Inventory Turnover Ratio :

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

$\sf{\longrightarrow{\dfrac{Cost \: of \: Revenue \: from \: Operation}{ \frac{Ope.ning \: Inventory \: + \: Closing \: Inventory}{2}}}}$

$\sf{\longrightarrow \: Average \: Inventory \: = \: {\dfrac{6,00,000}{5}}}$

Average Inventory = 1,20,000

★ Average Inventory =

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

$\sf{\longrightarrow\:1,20,000\:=\:{\dfrac{Ope.ning \: Inventory \: + \: Closing \: Inventory}{2}}}$

Let,

Opening Inventory = x

Closing Inventory = x + 8,000

$\sf{\longrightarrow\:1,20,000\:=\:{\dfrac{x \: + \:(x \: + 8,000)}{2}}}$

2,40,000 = 2x + 8,000

2,40,000 - 8,000 = 2x

2,32,000 = 2x

x = 2,32,000/2

x = 1,16,000

Opening Inventory = 1,16,000

Therefore, The value of Opening Inventory = 1,16,000.