Question 135 Chapter 4 of +2-B
Table of Contents
Miscellaneous
135. Opening Inventory Rs 80,000; Purchases Rs 4,30,900; Direct Expenses Rs 4,000; Closing Inventory Rs 1,60,000; Administrative Expenses Rs 21,100; Selling and Distribution Expenses Rs 40,000;Revenue from Operations, i.e., Net Sales Rs 10,00,000.
Calculate Inventory Turnover Ratio; Gross Profit Ratio; and Opening Ratio.
You are required to calculate Return on Investment for the year 2018-19 with reference to Opening Capital Employed.
The solution of Question 135 Chapter 4 of +2-B: –
I
| Cost of Goods Sold | = | Opening Inventory + Purchases + Direct Expenses − Closing Inventory |
| = | Rs 80,000 + Rs 4,30,900 + Rs 4,000 − Rs 1,60,000 | |
| = | Rs. 3,54,900 |
| Average Inventory | = | Opening Inventory + Closing Inventory |
| 2 |
| = | Rs. 80,000 +Rs 1,60,000 | |
| 2 | ||
| = | Rs. 1,20,000 |
| Average Inventory Turnover Ratio | = | Cost of Goods Sold |
| Average Inventory |
| = | Rs. 3,54,900 | |
| Rs. 1,20,000 | ||
| = | 2.96 Times |
II
| Net Sales | = | Rs 10,00,000 |
| Gross Profit | = | Net Sales − Cost of Goods Sold |
| = | Rs 10,00,000 − Rs 3,54,900 | |
| = | Rs 6,45,100 |
| Gross Profit Ratio | = | Gross Profit | X | 100 |
| Net Sales |
| Gross Profit Ratio | = | Rs 6,45,100 | X | 100 |
| Rs 10,00,000 | ||||
| = | 64.51% |
III
| Operating Expenses | = | Administration Expenses + Selling and Distribution Expenses |
| = | Rs 21,100 − Rs 40,000 | |
| = | Rs 61,100 | |
| Operating Cost | = | Cost of Goods Sold + Operating Expenses |
| = | Rs 3,54,900 + Rs 61,100 | |
| = | Rs 4,16,000 |
| Operating Ratio | = | Operating Cost | X | 100 |
| Net Sales |
| Operating Ratio | = | Rs 4,16,000 | X | 100 |
| Rs 10,00,000 | ||||
| = | 41.6% |
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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
