Multiple choice

The following details relate to a trading concern for the year 2010:

Opening stock Rs. 4,000. Purchases and sales during the year Rs. 36,000 and Rs. 35,000, respectively. Profit on sales is 20%. 50% of the closing stock was found to be obsolete and estimated to fetch only 50% of cost. The value for the closing stock at the end of the year will be

  1. Rs. 9,000

  2. Rs. 12,000

  3. Rs. 6,000

  4. Rs. 10,500
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A Correct answer
Explanation

Opening stock Rs. 4,000 + Purchase Rs. 36,000 - Cost of goods sold Rs. 28,000 (35,000 - 20%) Thus, stock left Rs. 12,000, out of which 50% stock is obsolete and valued at 50%, i.e. Rs. 3,000. This stock along with other goods of Rs. 6,000 will amount to Rs. 9,000.

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