# Question 22 Chapter 4 of +2-B – USHA Publication 12 Class

Q-22- CH-4 Book 2 - Usha Pub. +2 Book 2020 - Solution

Question 22 Chapter 4 of +2-B

I. Liquidity Ratios

22. (Calculation of Current assets) A company’s inventory turnover id 5 times. Inventory at the end
of the year is ₹ 4,000 more than the inventory at the beginning of the year. Sales (Revenue from Operation) during the year (all credit) were ₹ 3,00,000. The rate of gross profit on the sale is 20%. Current liabilities at the end of the year were ₹ 60,000. The quick ratio is 1: 1.
Calculate the Current assets at the end of the year.

## The solution of Question 22 Chapter 4 of +2-B: –

 Current Assets = Quick Assets + Closing inventory Current Liabilities = ₹ 60,000 Quick ratio = 1 : 1 Quick Assets = ₹ 60,000 Inventory turnover ratio = 5 times Sales = ₹ 3,00,000 Rate of gross profit on sale = 20% Cost of goods sold = ₹ 2,40,000
 Inventory turnover ratio = Cost of goods sold Average Inventory
 5 times = Cost of goods sold Average Inventory
 Let assume that opening inventory = x = X + ₹ 4,000
 5 times = ₹ 2,40,000 x + (x + ₹ 4,000) 2
 5 times = ₹ 2,40,000 2x + ₹ 4,000) 2
 Inventory turnover ratio = ₹ 2,40,000 x + ₹ 2,000)
 5 (x + ₹ 2,000) = ₹ 2,40,000 5x + ₹10,000 = ₹ 2,40,000 5x + ₹10,000 = ₹ 2,40,000 – ₹ 10,000 5x = ₹ 2,30,000
 X = ₹ 2,30,000 5
 x = ₹ 46,000 Opening Inventory = ₹ 46,000 Closing Inventory = ₹ 46,000 + ₹ 4,000 Closing Inventory = ₹ 50,000 New Current Assets = Quick Assets + Closing Inventory = ₹ 60,000 + ₹ 50,000 = ₹ 1,10,000

What are Liquidity Ratios – Formulas and Examples

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

## Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

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