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The total cost of goods available for sale with a company during the current year is Rs.12,00,000 and the total sales during the period are Rs.13,00,000. If the gross profit margin of the company is 33 1/3% on cost, the closing inventory during the current year is
  • a)
    Rs.4,00,000
  • b)
    Rs.3,00,000
  • c)
    Rs.2,25,000
  • d)
    Rs.2,60,000.
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
The total cost of goods available for sale with a company during the c...
Closing inventory is the value of unsold goods at the end of an accounting period. It is an important component to determine the cost of goods sold and the gross profit of a company.

Given:
Total cost of goods available for sale = Rs.12,00,000
Total sales during the period = Rs.13,00,000
Gross profit margin on cost = 33 1/3% = 1/3

To find: Closing inventory

Let's calculate the cost of goods sold (COGS) using the gross profit margin.

1. Calculate the gross profit:
Gross profit = Total sales - COGS

2. Calculate COGS:
Gross profit margin on cost = Gross profit / Total cost of goods available for sale

Rearranging the formula, we get:
Gross profit = Gross profit margin on cost * Total cost of goods available for sale

Substituting the given values:
Gross profit = (1/3) * Rs.12,00,000
= Rs.4,00,000

3. Calculate COGS:
COGS = Total sales - Gross profit
= Rs.13,00,000 - Rs.4,00,000
= Rs.9,00,000

4. Calculate closing inventory:
Closing inventory = Total cost of goods available for sale - COGS
= Rs.12,00,000 - Rs.9,00,000
= Rs.3,00,000

Therefore, the closing inventory during the current year is Rs.3,00,000.
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The total cost of goods available for sale with a company during the current year is Rs.12,00,000 and the total sales during the period are Rs.13,00,000. If the gross profit margin of the company is 33 1/3% on cost, the closing inventory during the current year isa)Rs.4,00,000b)Rs.3,00,000c)Rs.2,25,000d)Rs.2,60,000.Correct answer is option 'C'. Can you explain this answer?
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The total cost of goods available for sale with a company during the current year is Rs.12,00,000 and the total sales during the period are Rs.13,00,000. If the gross profit margin of the company is 33 1/3% on cost, the closing inventory during the current year isa)Rs.4,00,000b)Rs.3,00,000c)Rs.2,25,000d)Rs.2,60,000.Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The total cost of goods available for sale with a company during the current year is Rs.12,00,000 and the total sales during the period are Rs.13,00,000. If the gross profit margin of the company is 33 1/3% on cost, the closing inventory during the current year isa)Rs.4,00,000b)Rs.3,00,000c)Rs.2,25,000d)Rs.2,60,000.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The total cost of goods available for sale with a company during the current year is Rs.12,00,000 and the total sales during the period are Rs.13,00,000. If the gross profit margin of the company is 33 1/3% on cost, the closing inventory during the current year isa)Rs.4,00,000b)Rs.3,00,000c)Rs.2,25,000d)Rs.2,60,000.Correct answer is option 'C'. Can you explain this answer?.
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