Question

Opening Inventory ₹75,000; Closing Inventory ₹1,05,000; Inventory

Turnover Ratio 6; Gross Profit 20% on cost; what will be Gross Profit?​

Answer 1

Opening Inventory ₹75,000; Closing Inventory ₹1,05,000; Inventory

Turnover Ratio 6; Gross Profit 20% on cost; what will be Gross Profit?

₹ 1,08,000 Ans.

Answer 2

Answer:

Gross Profit will be ₹ 1,08,000

Explanation:

Solution :

Inventory Turnover Ratio = 6 times

★ Inventory Turnover Ratio :

$\sf{\longrightarrow{\dfrac{Cost \: of \: Goods \: Sold}{Average \: Inventory}}}$

$\sf{\longrightarrow \: 6 \: = \: {\dfrac{Cost \: of \: Goods \: Sold}{ \frac{Ope.ning \: Inventory \: + \: Closing \: Inventory}{2}}}}$

★ Average Inventory =

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

$\sf{\longrightarrow \: 6 \: = \: {\dfrac{Cost \: of \: Goods \: Sold}{ \frac{75,000 \: + \: 1,05,000}{2}}}}$

$\sf{\longrightarrow \: 6 \: = \: {\dfrac{Cost \: of \: Goods \: Sold}{ \frac{1,80,000}{2}}}}$

$\sf{\longrightarrow \: 6 \: = \: {\dfrac{Cost \: of \: goods \: from \: sold}{90000}}}$

Cost of Goods Sold = 90,000 × 6

Cost of Goods Sold = 5,40,000

Gross Profit = 20% on Cost

= 5,40,000 × (20/100)

= 1,08,000

Gross Profit = ₹ 1,08,000

Therefore, Gross Profit will be ₹ 1,08,000