R.T ltd sells goods at 20% gross profit on cost. Find out the value of closing stock inventory Opening inventory at market price -120000 Sales- 3840000 Purchase at cost- 3400000?

Question

Answer

Solution:

Given,
Gross profit on cost = 20%
Opening inventory at market price = 120000
Sales = 3840000
Purchase at cost = 3400000

Finding the value of closing stock inventory:

Step 1: Calculate the cost of goods sold (COGS)

COGS = (Sales / (1 + Gross profit on cost %))
= (3840000 / 1.2)
= 3200000

Step 2: Calculate the cost of goods available for sale (COGAS)

COGAS = (Opening inventory at market price + Purchase at cost)
= (120000 + 3400000)
= 3520000

Step 3: Calculate the value of closing stock inventory

Closing stock inventory = (COGAS - COGS)
= (3520000 - 3200000)
= 320000

Therefore, the value of closing stock inventory is 320000.

Explanation:

The given problem involves calculating the value of closing stock inventory. This can be done by first calculating the cost of goods sold (COGS) using the gross profit on cost percentage. Once COGS is known, the cost of goods available for sale (COGAS) can be calculated by adding the opening inventory at market price and the purchase at cost. Finally, the value of closing stock inventory can be calculated by subtracting COGS from COGAS.

Using the above steps, we get the value of closing stock inventory as 320000. This means that the company has inventory worth 320000 which has not been sold yet. This inventory will be carried forward to the next accounting period and will be accounted for accordingly.

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