Question 118 Chapter 4 of +2-B - USHA Publication 12 Class

Question 118 Chapter 4 of +2-B

Miscellaneous (Analytical Questions)

118. (Calculation of Opening Inventory & Closing Inventory) Calculate the amount of opening stock and closing stock from the following figures:-
Average Debt Collection period 4 months; Inventory Turnover ratio 3 times, Average Trade Receivable ₹ 1,00,000; cash sales being 25% of total sales; Gross profit ratio 25% Inventory at the end was 3 times more than that in the beginning.

The solution of Question 118 Chapter 4 of +2-B: –

Average Debt Collection Period	=	No. of working days
Average Debt Collection Period	=	Debtors Turnover Ratio

4	=	12 Months
	=	Debtors Turnover Ratio

Debtors Turnover Ratio	=	12
		4
	=	3 times

Debtors Turnover Ratio	=	Net Credit Sales
Debtors Turnover Ratio	=	Average Debtors

3	=	Net Credit Sales
	=	₹ 1,00,000
Net Credit Sales	=	3 x 1,00,000
	=	₹ 3,00,000
Let Assume Total Sales	=	₹ 1
Cash Sales	=	1
	=	4

(i) Return on investment Ratio	=	₹ 1	–	1
(i) Return on investment Ratio	=	₹ 1	–	4

	=	3
	=	4
Total Sales	=	3	X	x ₹ 3,00,000
		4	X	x ₹ 3,00,000

	=	₹ 4,00,000
Cost of goods sold	=	Sales – Gross Profit
	=	₹ 4,00,000 – 25%
	=	₹ 4,00,000 – ₹ 1,00,000
	=	₹ 3,00,000
Inventory Turnover Ratio	=	Cost of goods sold
		Average Inventory
3	=	₹ 3,00,000
		Average Inventory
Average Inventory	=	₹ 3,00,000
		3
	=	₹ 1,00,000
Average Inventory	=	Opening Stock + Closing Stock
		2
₹ 1,00,000 x 2	=	Opening Stock + Closing Stock
	=	₹ 2,00,000
Opening Stock	=	₹ 1
Closing Stock	=	₹ 3
Total Stock	=	1 + 3
	=	4
Opening Stock	=	₹ 2,00,000	X	1
	=	₹ 2,00,000	X	4
	=	₹ 50,000
Closing Stock	=	₹ 1,00,000	X	3
	=	₹ 1,00,000	X	4
	=	₹ 1,50,000

End of Solution

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Question 120 Chapter 4 of +2-B – USHA Publication 12 Class

Question 121 Chapter 4 of +2-B – USHA Publication 12 Class

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