Question 78 Chapter 4 of +2-B - T.S. Grewal 12 Class

Question 78 Chapter 4 of +2-B

Interest Coverage Ratio

78. From the following Statement of Profit and Loss for the year ended 31st
March 2019 of Rex Ltd., calculate Inventory Turnover Ratio:

Statement of Profit and Loss for the year ended 31st March 2019

Particulars	Note No.	Amount
I. Revenue from Operations (Net Sales)		6,00,000
II. Expenses:
(a) Purchases of Stock-in-Trade		3,00,000
(b) Change in Inventory of Stock-in-Trade	1	50,000
(c) Employees Benefit Expenses		60,000
(d) Other Expenses	2	45,000
Total Expenses		4,55,000
III. Profit before Tax (I - II)		1,45,000
IV. Less: Tax		45,000
V. Profit after Tax (III – IV)		1,00,000

Notes to Accounts:-

 

Particulars	Rs.
I. Change in Inventory of stock-in-Trade
Opening Inventory	1,25,000
Less: Closing Inventory	75,000
	50,000
2. Other Expenses	60,000
Carriage Inwards	15,000
Miscellaneous Expenses	30,000
	45,000

 

The solution of Question 78 Chapter 4 of +2-B: -

 

Cost of Goods Sold	=	Opening Inventory+ Purchases + Direct Expenses – Closing Inventory
	=	Rs. 1,25,000 + Rs. 3,00,000 + Rs. 15,000 – Rs. 75,000
	=	Rs. 3,65,000

 

Average Inventory	=	Opening Inventory + Closing Inventory
		2

Inventory Turnover Ratio	=	Rs. 1,25,000 + Rs. 75,000
		2
	=	Rs. 1,00,000

Inventory Turnover Ratio	=	Cost of Goods Sold
		Average Inventory

Inventory Turnover Ratio	=	Rs. 3,65,000
		Rs. 1,00,000
	=	3.65 Times

 

 

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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

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