Question 91:
Following figures have been extracted from Shivalika Mills Ltd.:
Inventory in the beginning of the year `
60,000.
Inventory at the end of the year
`
1,00,000.
Inventory Turnover Ratio 8 times.
Selling price 25% above cost.
Compute amount of Gross Profit and Revenue from Operations (Net Sales).
Answer:
Average Inventory= Opening Inventory +Closing Inventory/2
=60,000+1,00,000/2=80,000
Inventory tunover ratio= Cost of goods sold / Average Stock
8 = Cost of goods sold / 80,000
Cost of goods sold=6,40,000
Gross Profit = 25% on Cost
Gross profit =6,40,000×25/100=1,60,000
Sales = Cost of Goods Sold + Gross Profit
= 6,40,000 + 1,60,000 = 8,00,000
Question 92:
From the following Information, calculate Inventory Turnover Ratio:
Credit Revenue from Operations ` 6,00,000; Cash
Revenue from Operations ` 2,00,000, Gross
Profit 25% of Cost, Closing Inventory was 3 times the Opening Inventory.
Opening Inventory was 10% of Cost of Revenue from Operations.
Answer:
Average Inventory=60,000+1,80,000/2= ` 1,20,000
Opening Inventory=6,00,000×10%= ` 60,000
Closing Inventory=60,000×3= ` 1,80,000
Cost of Revenue from Operations=Revenue from Operations-Gross Profit
=8,00,000-2,00,000= ` 6,00,000
Inventory Turnover Ratio=Cost of Revenue from OperationsAverage Inventory
=6,00,000/1,20,000=5 Times
Calculation of Opening and Closing Inventory
Question 93:
From the following information, calculate value of Opening Inventory:
|
Closing Inventory |
= |
` 68,000 |
|
Total Sales |
= |
` 4,80,000 (including Cash Sales ` 1,20,000) |
|
Total Purchases |
= |
` 3,60,000 (including Credit Purchases ` 2,39,200) |
Goods are sold at a profit of 25% on cost.
Answer:
Let Cost of Goods Sold be = x
Gross profit=X×25/100=25X/100
Cost of goods sold = Sales – Gross profit
Or X=4,80,000-25X/100
Or X+25X/100=4,80,000
Or 125X/100=4,80,000
X=4,80,000×100/125=3,84,000
Cost of Goods Sold = x = ` 3,84,000
Cost of Goods Sold = Opening Inventory (Stock) + Purchases − Closing Inventory (Stock)
3,84,000 = Opening Inventory + 3,60,000 − 68,000
Opening Inventory = 3,84,000 − 2,92,000 = ` 92,000
Question 94:
From
the following information, determine Opening and Closing inventories:
Inventory Turnover Ratio 5 Times, Total sales `2,00,000, Gross Profit Ratio 25%. Closing Inventory
is more by `4,000 than the Opening Inventory.
Answer:
Sales = 2,00,000
Gross Profit = 25% on Sales
Gross Profit = 2,00,000×25/100=50,000
Cost of Goods Sold = Total Sales − Gross Profit
= 2,00,000 − 50,000 = 1,50,000
Inventory tunover ratio= Cost of goods sold / Average Stock
5=1,50,000/ Inventory tunover
Inventory tunover=30,000
Let Opening Inventory = x
Closing Inventory = x + 4,000
|
Average Stock |
= Opening Stock + Closing Stock |
30,000=X+X+4,000/2
Or, 60,000=2X+4,000
Or, X=28,000
Opening Inventory = x = ` 28,000
Closing Inventory = x + 4,000 = 28,000 + 4,000 = ` 32,000
Question 95:
Inventory Turnover Ratio 5 times; Cost of Revenue from Operations (Cost of Goods Sold) ` 18,90,000. Calculate Opening Inventory and Closing Inventory if Inventory at the end is 2.5 times more than that in the beginning.
Answer:
Inventory tunover ratio= Cost of goods sold / Average Stock
5=18,90,000/Average Inventory
Average Inventory=3,78,000
Let Opening Inventory = x
Closing Inventory = 2.5x + x = 3.5 x
Average Inventory = Opening Inventory + Closing Inventory /2
3,78,000=X+3.5X/2
Or, 4.5X =7,56,000
Or, X =1,68,000
Opening Inventory = x = ` 1,68,000
Closing Inventory = 3.5 x = 3.5 × 1,68,000 = ` 5,88,000
Ts Grewal Solution 2023-2024
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Class 12 / Volume – I
Chapter 3 – Accounting Ratio