Multiple choice

The total cost of goods available for sale with a company during the current year is Rs. 12,00,000 and the total sale during the period is Rs. 13,00,000. The gross profit margin of the company is 33 1/3% on cost.

What is the value of closing inventory during the current year?

  1. Rs. 4,00,000

  2. Rs. 3,00,000

  3. Rs. 2,25,000

  4. Rs. 2,60,000

  5. Rs. 2,55,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Given profit percentage = 33 1/3% on cost, i.e. 25% on sales Gross profit = 25% of 13,00,000 = Rs. 3,25,000 Value of closing inventory can be calculated as follows: Cost of goods available for sale + Gross profit = Sales + Closing stock Closing stock = Cost of goods available for sale + Gross profit - Sales = 12,00,000 + 32,50,000 - 13,00,000 Closing stock = Rs. 2,25,000

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