Question

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Cash Revenue from Operations (Cash Sales) Credit Revenue from Operations (Credit Sales) 1,00,000 5,00,000 Gross Profit 1,20,000 Inventory Turnover Ratio 4 times Calculate the value of Opening and Closing Inventory in each of the following alternative cases .
Case II If closing inventory was 2 times that in the beginning.​

★ SUBJECT - ACCOUNTANCY
❖ ONLY FULL ANSWER - WITH PROPER AND COMPLETE EXPLANATION NEEDED
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❖ INCOMPLETE ANSWER WILL BE REPORTED AND RATED 1 STAR ​​

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Answer 1

Answer:

Cash revenue from operations=1,00,000

Credit Revenue from operations=5,00,000

Total revenue from operations=6,00,000

Gross profit=120000

Costof goods sold= 600000-120000

Cost of goods sold=4,80,000

Inventory Turnover ratio=Cost of goods sold÷ Average inventory

4=4,80,000÷Average inventory

Average inventory=1,20,000

Closing inventory=2×opening inventory

Also Average invemtory=op+closing/2

120000= op+2 opening /2

120000=3opening/2

240000=3opening inventory

80,000=opening inventory

Closing inventory=2× opening inventory

=2×80000

=1,60,000

Answer 2

Answer:

Explanation:

★ SUBJECT - ACCOUNTANCY

Cash revenue from operations=1,00,000

Credit Revenue from operations=5,00,000

Total revenue from operations=6,00,000

Gross profit=120000

Costof goods sold= 600000-120000

Cost of goods sold=4,80,000

Inventory Turnover ratio=Cost of goods sold÷ Average inventory

4=4,80,000÷Average inventory

Average inventory=1,20,000

Closing inventory=2×opening inventory

Also Average invemtory=op+closing/2

120000= op+2 opening /2

120000=3opening/2

240000=3opening inventory

80,000=opening inventory

Closing inventory=2× opening inventory

=2×80000

=1,60,000