Multiple choice

On 31 st December, 2006, goods sold at a sale price of? 15,000 were lying with a customer, to whom these goods were sold on 'sale or return basis' and recorded as actual sales. Since no consent was received from him, the adjustment entry was made presuming goods were sent on approval at a profit of cost plus 20%. In the balance sheet the stock with customers account will be shown at ______________.

  1. Rs 15,000

  2. Rs 12,000

  3. Rs 10,000

  4. Rs 12,500
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The goods were sold at cost plus 20%. If cost is 100, price is 120. Given price is 15000, cost = (15000 / 120) * 100 = 12500. Stock with customers is valued at cost.

AI explanation

When goods are sent on approval at a profit of cost plus 20%, the selling price is 120% of the cost. To find the cost of the goods lying with the customer, divide the recorded sale price of Rs. 15,000 by 1.20. This calculation gives 15,000 / 1.20 = Rs. 12,500. The result is Rs. 12,500.

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