Question 109 Chapter 4 of +2-B - T.S. Grewal 12 Class

Question 109 Chapter 4 of +2-B

Gross Profit Ratio

109. (i) Revenue from Operations: Cash Sales 4,20,000; Credit Sales 6,00,000;
Return 20,000. Cost of Revenue from Operations or Cost of Goods Sold
8,00,000. Calculate Gross Profit Ratio.
(ii) Average Inventory 1,60,000; Inventory Turnover Ratio is 6 Times;
Selling Price 25% above cost. Calculate Gross Profit Ratio.
(iii) Opening Inventory 1,00,000; Closing Inventory 60,000; Inventory
Turnover Ratio 8 Times; Selling Price 25% above cost. Calculate
Gross Profit Ratio.

 

The solution of Question 109 Chapter 4 of +2-B: -

Case I :

Net Sales	=	Cash Sales + Credit Sales – Sales Return
	=	Rs. 4,20,000 + Rs. 6,00,000 – Rs. 20,000
	=	Rs. 10,00,000
Cost of Goods Sold	=	Rs. 8,00,000
Gross Profit	=	Net Sales – Cost of Goods Sold
	=	Rs. 10,00,000 – Rs. 8,00,000
	=	Rs. 2,00,000

 

Inventory Turnover Ratio	=	Cost of Goods Sold
		Average Inventory

8	=	Cost of Goods Sold
		Rs. 3,20,000
	=	3,20,000 x 8
Cost of Goods Sold	=	Rs. 25,60,000

Revenue from Operations	=	Gross Profit	X	100
		Net Sales

Revenue from Operations	=	Rs. 2,00,000	X	100
		Rs.10,00,000
	=	20%

Case II :

Average Stock	=	Rs. 1,60,000
Inventory Turnover Ratio	=	6 Times

Inventory Turnover Ratio	=	Cost of Goods Sold
		Average Inventory

6	=	Cost of Goods Sold
		Rs. 1,60,000
Cost of Goods Sold	=	Rs 1,60,000 X 6
	=	Rs 9,60,000
Gross Profit	=	25% on Cost

Gross Profit	=	25	XRs.9,60,000
		100
	=	Rs.2,40,000

 

Net Sales	=	Cost of Goods Sold + Gross Profit
	=	Rs. 9,60,000 + Rs. 2,40,000
	=	Rs. 12,00,000

 

Gross Profit Ratio	=	Gross Profit	X	100
		Net Sales

Gross Profit Ratio	=	Rs. 2,40,000	X	100
		Rs.12,00,000
	=	20%

 

Case III :

Opening Inventory	=	Rs. 1,00,000
Closing Inventory	=	Rs. 60,0000

Average Inventory	=	Opening Inventory + Closing Inventory
		2

=	Rs. 1,00,000 + Rs. 60,000
	2
=	Rs. 80,000

Inventory Turnover Ratio	=	Cost of Goods Sold
		Average Inventory

8	=	Cost of Goods Sold
		Rs. 80,000
Cost of Goods Sold	=	Rs. 80,000 x 8
	=	Rs. 6,40,000
Gross Profit	=	25% on Cost

Gross Profit	=	25	x Rs. 6,40,000
		100
	=	Rs.1,60,000

Net Sales	=	Cost of Goods Sold + Gross Profit
	=	Rs. 6,40,000 + Rs. 1,60,000
	=	Rs. 8,00,000

Gross Profit Ratio	=	Gross Profit	X	100
		Net Sales

Gross Profit Ratio	=	Rs. 1,60,000	X	100
		Rs. 8,00,000
	=	20%

 

 

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Also, Check out the solved question of previous Chapters: -

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 - Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 - Accounting for Partnership Firms - Fundamentals
• Chapter No. 3 - Goodwill: Nature and Valuation
• Chapter No. 4 - Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 - Admission of a Partner
• Chapter No. 6 - Retirement/Death of a Partner
• Chapter No. 7 - Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 8 - Company Accounts -  Accounting for Share Capital
• Chapter No. 9 - Company Accounts - Issue of Debentures
• Chapter No. 10 - Redemption of Debentures

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 - Financial Statements of a Company
• Chapter No. 2 - Financial Statement Analysis 
• Chapter No. 3 - Tools of Financial Statement Analysis - Comparative Statements and Common- Size Statements
• Chapter No. 4 - Accounting Ratios
• Chapter No. 5 - Cash Flow Statement

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication