Question

From the following balances extracted from the books of M/s Ahuja and
Nanda. Calculate the amount of :
(a) Cost of goods available for sale
(b) Cost of goods sold during the year
(c) Gross Profit
[tex]
\begin{tabular}{c c}\\
\begin{center}\\
& Rs. \\
Opening stock & 25,000 \\
Credit purchases & 7,50,000 \\
Cash purchases & 3,00,000 \\
Credit sales & 12,00,000 \\
Cash sales & 4,00,000 \\
Wages & 1,00,000 \\
Salaries & 1,40,000 \\
Closing stock & 30,000 \\
Sales return & 50,000 \\
Purchases return & 10,000
\end{center}
\end{tabular}
[/tex]

Answer 1

a)Cost of Goods available for Sale is Rs.11,65,000.

b)Cost of Goods sold should be Rs.11,35,000.

c)Gross Profit should be Rs.4,15,000.

Explanation:

a)Calculation of Cost of Goods available for Sale

Cost of goods available for sale = Opening stock + Net Purchases + Wages

Net Purchases = $7,50,000+3,00,000-10,000$

                         = Rs.10,40,000

Cost of Goods available for sale = $25,000+10,40,000+1,00,000$

                                                       = Rs.11,65,000

b)Calculation of Cost of Goods sold

Cost of goods sold = Net Sales - Gross profit

or

COGS = Opening stock +Net purchases + Direct Expenses - Closing stock

           = $25000+10,40,000+1,00,000-30,000$

            = Rs.11,35,000

c)Calculation of Gross Profit

                                                      Trading A/c

Particulars                Amount(Rs.)      Particulars              Amount(Rs.)    

To Opening Stock        25000         By Sales:                        1550000

To Purchases:               10,40,000    Credit sales 1200000

  Credit purchase 7.5L                      Cash Sales   400000

  Cash Purchases 3L                          Sales Returns(50,000)

   Returns       (10,000)

                                                                                                   

To Wages                        1,00,000        By Closing stock           30,000

To Gross Profit                415000

(bal. fig.)                                                                                                          

                                      1580000                                               1580000

                                                                                                                       

Therefore,Gross Profit = Rs.415000.