Question

Stock Turnover ratio- 6 times; Gross profit- 20% of sales; Sales Rs. 180,000; Closing stock is Rs. 15,000 in excess of opening stock. Find the value of opening stock and closing stock.

Answer 1

Answer:

stock turnover ratio = cost of goods ÷ avg stock

cost of goods sold = sales - gross profit

gross profit = 1,80,000 × 20%=36,000

cost of goods = 1,80,000-36,000= 1,44,000

stock turnover ratio =cogs/ avg stock

6 = 1,44,000/avg stock

avg stock = 1,44,000/6

avg stock = 24,000

average stock = opening stock + closing stock ÷ 2

24,000 = X + X+15,000/2

48,000-15,000=2x

X= 33,000/2 = 16,500

Answer 2

Opening stock = 16,500

Closing stock = 31,500

Explanation:

Given:

Stock turn over ratio = 6 times

Gross profit = 20% of sales

Sales Rs. 180,000

Opening stock = a

Closing stock = a + 15,000

Cost of goods sold = Sales - Gross profit

Cost of goods sold = 1,80,000  - (1,80,000 x 20%)

Cost of goods sold = 1,80,000 - 36,000 = 1,44,000

Stock turnover ratio = Cost of goods sold /  Average stock

6 = 1,44,000 / Average stock

Average stock = 1,44,000 / 6

Average stock = 24,000

Average stock = (Opening stock + Closing stock) / 2

24,000 = (a + a + 15,000) / 2

48,000 - 15,000 = 2a

a = 33,000 / 2

= 16,500

Opening stock = 16,500

Closing stock = 31,500

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