Multiple choice

C Ltd. recorded the following information as on March 31, 2016: Inventory as on April 1, 2015 is Rs. 80,000 Purchases are Rs. 1,60,000 Sales are Rs. 2,00,000 It is noticed that goods worth Rs. 30,000 were destroyed due to fire. Against this, the insurance company accepted a claim of Rs. 20,000. The company sells goods at cost plus 33 1/3%.

What will be the value of closing inventory for the year ended 31 March, 2016 after taking into account the given information?

  1. Rs. 10,000

  2. Rs. 30,000

  3. Rs. 1,00,000

  4. Rs. 60,000

  5. None of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Gross profit margin is 33 1/3% on cost (25% on sales). Gross profit = 50,000 Closing inventory = Opening stock + Purchases + Gross profit - Sales - Goods destroyed in fire Putting respective values in the above equation, we get  Closing inventory = 80,000 + 1,60,000 + 50,000 - 2,00,000 - 30,000 = Rs. 60,000

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