Multiple choice

Cost of goods available for sales Rs.5,00,000, selling price =25% on sales ,Closing Inventory Rs.2,75,000. The sales are _____________.

  1. Rs.2,00,000

  2. Rs.2,81,250

  3. Rs.3,00,000

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Cost of goods sold (COGS) = Cost of goods available - Closing Inventory = 500,000 - 275,000 = 225,000. Selling price = 25% on sales means profit is 25% of sales, so COGS is 75% of sales. Sales = 225,000 / 0.75 = 300,000.

AI explanation

By applying the cost of goods sold formula, the cost of goods sold equals the cost of goods available for sale minus the closing inventory, which is 5,00,000 minus 2,75,000, equaling 2,25,000. Using the profit on sales relationship where the selling price is 25 percent profit, the cost price equals 75 percent of the selling price, so 0.75 times the selling price equals 2,25,000. Solving for the selling price gives 2,25,000 divided by 0.75, which equals 3,00,000.

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