Question

revenue from operation rupees 180000 inventory turnover =3 times stock at the beginning is 2000 more than the stock at the end calculate the values of opening and closing stocks when gross profit is 20% on cost​

Answer 1

Answer:

(i) Let the cost = Rs. 100

Gross profit = Rs. 25

Revenue from Operation (Sales) = Rs. 100 + Rs. 25 = Rs. 125

Revenue from Operation (all credit) = Rs. 2,40,000 (Given)

∴ Cost of Revenue from Operations = Rs. 2,40,000 × Rs. 100/Rs. 125 = Rs. 1,92,000.

(ii) Let Opening Inventory = x

Closing Inventory will be = x + Rs. 6,000

Average Inventory = Opening Inventory + Closing Inventory2

=x+x+Rs.6,0002

Inventory Turnover Ratio = Cost of Revenue from OperationsAverage Inventory

6=Rs.1,92,000x+x+Rs.6,0002

6x + 6x + Rs. 36,000 = Rs. 3,84,000

12x = Rs. 3,84,000 - Rs. 36,000

12x = Rs. 3,48,000

x = Rs. 3,48,000/12 = Rs. 29,000 (Operating Inventory)

Closing Inventory = Rs. 29,000 + Rs. 6,000 = Rs. 35,000.

(iii) Quick Assets = Rs. 80,000 (CL) × 0.80 = Rs. 64,000.

(iv) Current Assets = Quick Assets + Inventory (Stock)

= Rs. 64,000 + Rs. 35,000 = Rs. 99,000.