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A sent some goods costing Rs. 3500 at a profit of 25% on sale to B on sale or return basis. B returned goods costing Rs. 800. At the end of year, the remaining goods were neither returned nor were approved by him. The stock on approval will be shown in balance sheet at: 
  • a)
    Rs. 2,000
  • b)
    Rs. 2,700
  • c)
    Rs. 2,700 less 25% of 2,700
  • d)
    Rs. 3,500
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
A sent some goods costing Rs. 3500 at a profit of 25% on sale to B on ...
Explanation:
To find the stock on approval at the end of the year, we need to calculate the value of the goods that were not returned or approved by B.

Step 1: Calculate the cost of goods sold (COGS)
The cost of goods sold is the total cost of the goods that were sold or returned by B.
COGS = Cost of goods purchased - Goods returned by B
COGS = Rs. 3500 - Rs. 800
COGS = Rs. 2700

Step 2: Calculate the selling price of the goods
The selling price of the goods is the total amount received from the sale.
Selling price = Cost of goods sold + Profit
Selling price = Rs. 2700 + 25% of Rs. 2700
Selling price = Rs. 2700 + 0.25 * Rs. 2700
Selling price = Rs. 2700 + Rs. 675
Selling price = Rs. 3375

Step 3: Calculate the stock on approval
The stock on approval is the value of the goods that were neither returned nor approved by B.
Stock on approval = Selling price - COGS
Stock on approval = Rs. 3375 - Rs. 2700
Stock on approval = Rs. 675

Therefore, the stock on approval will be shown in the balance sheet at Rs. 2,700.
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A sent some goods costing Rs. 3500 at a profit of 25% on sale to B on sale or return basis. B returned goods costing Rs. 800. At the end of year, the remaining goods were neither returned nor were approved by him. The stock on approval will be shown in balance sheet at:a)Rs. 2,000b)Rs. 2,700c)Rs. 2,700 less 25% of 2,700d)Rs. 3,500Correct answer is option 'B'. Can you explain this answer?
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A sent some goods costing Rs. 3500 at a profit of 25% on sale to B on sale or return basis. B returned goods costing Rs. 800. At the end of year, the remaining goods were neither returned nor were approved by him. The stock on approval will be shown in balance sheet at:a)Rs. 2,000b)Rs. 2,700c)Rs. 2,700 less 25% of 2,700d)Rs. 3,500Correct answer is option 'B'. 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 A sent some goods costing Rs. 3500 at a profit of 25% on sale to B on sale or return basis. B returned goods costing Rs. 800. At the end of year, the remaining goods were neither returned nor were approved by him. The stock on approval will be shown in balance sheet at:a)Rs. 2,000b)Rs. 2,700c)Rs. 2,700 less 25% of 2,700d)Rs. 3,500Correct answer is option 'B'. 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 A sent some goods costing Rs. 3500 at a profit of 25% on sale to B on sale or return basis. B returned goods costing Rs. 800. At the end of year, the remaining goods were neither returned nor were approved by him. The stock on approval will be shown in balance sheet at:a)Rs. 2,000b)Rs. 2,700c)Rs. 2,700 less 25% of 2,700d)Rs. 3,500Correct answer is option 'B'. Can you explain this answer?.
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