Question

Revenue from Operations = 6,00,000
Gross Profit 20% on cost
Excess of Closing Inventory over Opening Inventory = R 4,000
Other Current Assets other than inventories = 1,70,000
Inventory Turnover Ratio = 10 times

1)Cost of Revenue from Operations will be
2)Value of Current Assets will be
3)Value of closing inventory will be:
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Answer 1

Answer:

Gross profit=20%on cost

ie 1/5 on cost

ie 1/6 of sales

Revenue from operations=600000

Gross profit =1/6 of 600000

Gross Profit=100000

Therefore Cost of Revenue from operations is Rs 5,00,000

Inventory Turnover Ratio=Cost of Revenue from operations/Average inventory

10=500000/Average Inventory

Average inventory=50,000

(Opening inventory+Closing inventory)/2=50000

opening+4000+opening=100000

2 opening=96000

opening=48000

closing=52000

Current assets=170000+52000

=222000

Explanation:

Closing-Opening=4000

p.s. I dont know why you have written R before inventory in question . it might be a wrong typed. so i have considered difference as 4000 only