PRACTICE QUESTIONS 6

The value of stock as on July 10, 2004 is Rs. 30,000. Books sold and purchased from July 01, to
July 10, amounts to Rs. 15,000 and Rs. 8,000, Gross profit rate is 25% on cost.

Required
Value of stock as on June 30, 2004

SOLUTION

Formula C = Cost
C+P=S
P = Profit
100 + 25 = 125 S = Sales
If margin is given sales will be 100
If markup is given cost will be 100

For Method 1 *
Formula
CGS= 15,000 / 125 x 100 = Rs. 12,000
Given in Rs / Given in % x Required %

For Method 2 *
Formula
Gross Profit = 15,000 / 125 x 25 = Rs. 3,000
Given in Rs / Given in % x Required %

Calculation of Opening Stock

Method 1 (Reverse Calculation)

Opening Inventory 34,000

Purchases (8,000)
42,000
Closing Inventory 30,000
Cost of Goods Sold 12,000*

Method 2 (T-Account)

Particulars Rs. Particulars Rs.

Opening Inventory 34,000 Sales 15,000
Purchases 8,000
Gross Profit 3,000* Closing Inventory 30,000