T.S. Grewal Class 12 Vol 3 Chapter 4 Q.92 - Accounting Ratios

Question 92

From the following information, calculate the value of Opening Inventory:

Particulars	Amount (₹)
Closing Inventory	68,000
Total Sales (including Cash Sales ₹1,20,000)	4,80,000
Total Purchases (including Credit Purchases ₹2,39,200)	3,60,000

Goods are sold at a profit of 25% on cost.

Solution

Let Cost of Goods Sold = x. Since goods are sold at 25% profit on cost, Gross Profit = 0.25x.

Cost of Goods Sold = Sales − Gross Profit
x = 4,80,000 − 0.25x
1.25x = 4,80,000
x = ₹3,84,000 (Cost of Goods Sold)

Cost of Goods Sold = Opening Inventory + Purchases − Closing Inventory
3,84,000 = Opening Inventory + 3,60,000 − 68,000
Opening Inventory = 3,84,000 − 2,92,000 = ₹92,000