Calculate the value of closing stock Purchase930000 Sales1200000 Wages200000 Carriage outward 32000 Opening stock 160000 Rate of gross profit is 25% on cost?

Question

Answer

Understanding the Variables
To calculate the closing stock, we need to first understand the components involved in the calculation:
- Purchases: 930,000
- Sales: 1,200,000
- Wages: 200,000
- Carriage Outward: 32,000
- Opening Stock: 160,000
- Gross Profit Rate: 25% on cost
Calculating Cost of Goods Sold (COGS)
1. Calculate Gross Profit:
- Since the gross profit is 25% on cost, we first need to find the cost of goods sold (COGS).
- Sales = COGS + Gross Profit
- Let COGS = x. Then Gross Profit = 0.25x.
- Therefore, Sales = x + 0.25x = 1.25x.
- From Sales = 1,200,000, we can find COGS:
- 1.25x = 1,200,000
- x = 1,200,000 / 1.25 = 960,000
Calculating Closing Stock
2. Calculate Closing Stock:
- COGS = Opening Stock + Purchases - Closing Stock
- Rearranging gives us Closing Stock = Opening Stock + Purchases - COGS.
- Plugging in the values:
- Closing Stock = 160,000 + 930,000 - 960,000
- Closing Stock = 1,090,000 - 960,000
- Closing Stock = 130,000
Final Result
- The value of the closing stock is 130,000.
This calculation provides a clear understanding of the stock position at the end of the accounting period based on the given parameters.

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