Calculating Closing Stock

To calculate the closing stock, we need to use the following formula:

Closing Stock = Opening Stock + Purchases - Sales

Given:

Opening stock = 480000
Purchase = 1360000
Sales = 1950000
Gross profit is 30% on cost

Let's calculate the cost of goods sold:
Cost of Goods Sold = Sales / (1 + Gross Profit %)
Cost of Goods Sold = 1950000 / (1 + 0.3)
Cost of Goods Sold = 1500000

Now, we can calculate the closing stock using the formula above:

Closing Stock = 480000 + 1360000 - 1500000
Closing Stock = 710000

Therefore, the closing stock is 710000.

Explanation

To calculate the closing stock, we need to consider the opening stock, purchases, and sales. The opening stock is the stock that was carried forward from the previous accounting period. The purchases represent the new stock acquired during the current period. The sales represent the stock sold during the current period.

To calculate the gross profit, we need to use the following formula:

Gross Profit = Sales - Cost of Goods Sold

The cost of goods sold represents the cost of the stock that was sold during the current period. To calculate the cost of goods sold, we need to use the sales and the gross profit percentage.

Once we have calculated the cost of goods sold, we can use the formula above to calculate the gross profit. The gross profit represents the profit made on the stock sold during the current period.

Finally, we can use the formula to calculate the closing stock. The closing stock represents the stock that is left at the end of the current period.

340000