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Question 77 Chapter 4 of +2-B – T.S. Grewal 12 Class

Question 77 Chapter 4 of +2-B
Question No. 77- Chapter No.4 - T.S. Grewal +2 Book Part B

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Question 77 Chapter 4 of +2-B

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Interest Coverage Ratio

77. Calculate Inventory Turnover Ratio in each of the following alternative
cases:
Case 1: Cash Sales 25% of Credit Sales; Credit Sales 3,00,000; Gross Profit
20% on Revenue from Operations, i.e., Net Sales; Closing Inventory 1,60,000; Opening Inventory 40,000.
Case 2: Cash Sales 20% of Total Sales; Credit Sales 4,50,000; Gross Profit
25% on Cost; Opening Inventory 37,500; Closing Inventory 1,12,500.

The solution of Question 77 Chapter 4 of +2-B: –

Case I:

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Credit Sales=Rs. 3,00,000
Cash Sales=@25% of Credit Sales
 =Rs. 3,00,000 x 25%
Cash Sales=Rs. 75,000
Total Sales=Cash Sales + Credit Sales
 =Rs. 3,00,000 + Rs. 75,000
 =Rs. 3,75,000
Gross Profit=Rs. 3,75,000 x 20%
 =Rs. 75,000
Cost of Goods Sold=Total Sales – Gross Profit
 =Rs. 3,75,000 – Rs. 75,000
 =Rs. 3,00,000

 

Inventory Turnover RatioOpening Inventory + Closing Inventory
Average Inventory
Inventory Turnover RatioRs. 40,000 + Rs. 1,60,000
2
 =Rs. 1,00,000
Inventory Turnover RatioCost of Goods Sold
Average Inventory
Inventory Turnover RatioRs. 3,00,000
Rs. 1,00,000
 =3 Times


Case II:

Total Sales=X
Cash Sales=X x 20/100
Cash Sales=20x/100
Total Sales=Cash Sales + Credit Sales

 

X20x+Rs.4,50,000
100

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100x=20x + Rs. 4,50,00,000
100x – 20x=Rs. 4,50,00,000

 

XRs. 4,50,00,000
80
x=Rs. 5,62,500

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Cost of Goods Sold = y

Gross ProfitY   X25
100

 

 25y
100

 

25y=Rs. 5,62,500 – y
100
Y+25y=Rs. 5,62,500
100

 

125y=Rs. 5,62,500
100
YRs. 5,62,00,000
125
Y=Rs. 4,50,000

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Cost of Goods Sold = Rs. 4,50,000


Average InventoryOpening Inventory + Closing Inventory
2

 

Average InventoryRs. 37,500 + Rs. 1,12,500
2
 =Rs. 75,000

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Inventory Turnover RatioCost of Goods Sold
Average Inventory

 

Inventory Turnover RatioRs. 4,50,00
Rs. 75,000
 =6 Times

 

 

Balance Sheet: Meaning, Format & Examples

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Comment if you have any question.

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)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

Question 1 Chapter 1 of +2-B
T.S. Grewal’s Analysis of Financial Statements

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