Indian oil is a bulk distributor of petrol. Aperpetual inventory of petrol on hand is takenwhen the books are closed at the end of eachmonth. The following summary of informationis available of month.Sales Rs.37,80,00General Administration cost Rs.1,00,000Opening inventory:1 lakh liters @ 12/- per liter -Rs.12,00,00Purchases (including freight inward):June 1 2 lakh liters @ 11.40 Rs. Per liter.June -30 1 lakh liters @ 12.12 Rs. Per liter.June 30 closing inventory. 1,30,000 liters.Using the information given above computethe amount of cost of goods sold for themonth of June using LIFO method.a)Rs. 31,50,000b)Rs. 27,00,000c)Rs. 32,60,000d)Rs. 31,80,000Correct answer is option 'A'. Can you explain this answer?

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Sales – Rs.37,80,00
General Administration cost – Rs.1,00,000
Opening inventory:
1 lakh liters @ 12/- per liter -Rs.12,00,00
Purchases (including freight inward):
June – 1 2 lakh liters @ 11.40 Rs. Per liter.
June -30 1 lakh liters @ 12.12 Rs. Per liter.
June – 30 closing inventory. 1,30,000 liters.

Using the information given above compute the amount of cost of goods sold for the month of June using LIFO method.

a)
Rs. 31,50,000
b)
Rs. 27,00,000
c)
Rs. 32,60,000
d)
Rs. 31,80,000

Correct answer is option 'A'. Can you explain this answer?

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Indian oil is a bulk distributor of petrol. Aperpetual inventory of pe...

Solution:

Given data:

Opening inventory: 1,00,000 liters @ Rs. 12/- per liter = Rs. 12,00,000
Purchases (including freight inward):
June 1: 2,00,000 liters @ Rs. 11.40 per liter
June 30: 1,00,000 liters @ Rs. 12.12 per liter
Closing inventory on June 30: 1,30,000 liters

Calculation:

We will use the LIFO (Last In First Out) method to compute the cost of goods sold for the month of June.

Step 1: Calculate the cost of goods available for sale

Cost of opening inventory = 1,00,000 liters x Rs. 12/- per liter = Rs. 12,00,000
Cost of purchases = (2,00,000 liters x Rs. 11.40 per liter) + (1,00,000 liters x Rs. 12.12 per liter)
= Rs. 22,80,000 + Rs. 12,12,000
= Rs. 34,92,000
Cost of goods available for sale = Rs. 12,00,000 + Rs. 34,92,000 = Rs. 46,92,000

Step 2: Calculate the cost of goods sold

We will assume that the closing inventory is made up of the most recent purchases.

Cost of 1,30,000 liters @ Rs. 12.12 per liter = Rs. 15,75,600
Cost of goods sold = Cost of goods available for sale - Cost of closing inventory
= Rs. 46,92,000 - Rs. 15,75,600
= Rs. 31,16,400

Step 3: Add the General Administration cost to arrive at the cost of goods sold for the month of June.

Cost of goods sold for the month of June = Rs. 31,16,400 + Rs. 1,00,000 = Rs. 31,50,000

Therefore, the correct option is (a) Rs. 31,50,000.

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Indian oil is a bulk distributor of petrol. Aperpetual inventory of petrol on hand is takenwhen the books are closed at the end of eachmonth. The following summary of informationis available of month.Sales –Rs.37,80,00General Administration cost –Rs.1,00,000Opening inventory:1 lakh liters @ 12/- per liter -Rs.12,00,00Purchases (including freight inward):June – 1 2 lakh liters @ 11.40 Rs. Per liter.June -30 1 lakh liters @ 12.12 Rs. Per liter.June – 30 closing inventory. 1,30,000 liters.Using the information given above computethe amount of cost of goods sold for themonth of June using LIFO method.a)Rs. 31,50,000b)Rs. 27,00,000c)Rs. 32,60,000d)Rs. 31,80,000Correct answer is option 'A'. Can you explain this answer?

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Indian oil is a bulk distributor of petrol. Aperpetual inventory of petrol on hand is takenwhen the books are closed at the end of eachmonth. The following summary of informationis available of month.Sales –Rs.37,80,00General Administration cost –Rs.1,00,000Opening inventory:1 lakh liters @ 12/- per liter -Rs.12,00,00Purchases (including freight inward):June – 1 2 lakh liters @ 11.40 Rs. Per liter.June -30 1 lakh liters @ 12.12 Rs. Per liter.June – 30 closing inventory. 1,30,000 liters.Using the information given above computethe amount of cost of goods sold for themonth of June using LIFO method.a)Rs. 31,50,000b)Rs. 27,00,000c)Rs. 32,60,000d)Rs. 31,80,000Correct answer is option 'A'. 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 Indian oil is a bulk distributor of petrol. Aperpetual inventory of petrol on hand is takenwhen the books are closed at the end of eachmonth. The following summary of informationis available of month.Sales –Rs.37,80,00General Administration cost –Rs.1,00,000Opening inventory:1 lakh liters @ 12/- per liter -Rs.12,00,00Purchases (including freight inward):June – 1 2 lakh liters @ 11.40 Rs. Per liter.June -30 1 lakh liters @ 12.12 Rs. Per liter.June – 30 closing inventory. 1,30,000 liters.Using the information given above computethe amount of cost of goods sold for themonth of June using LIFO method.a)Rs. 31,50,000b)Rs. 27,00,000c)Rs. 32,60,000d)Rs. 31,80,000Correct answer is option 'A'. 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 Indian oil is a bulk distributor of petrol. Aperpetual inventory of petrol on hand is takenwhen the books are closed at the end of eachmonth. The following summary of informationis available of month.Sales –Rs.37,80,00General Administration cost –Rs.1,00,000Opening inventory:1 lakh liters @ 12/- per liter -Rs.12,00,00Purchases (including freight inward):June – 1 2 lakh liters @ 11.40 Rs. Per liter.June -30 1 lakh liters @ 12.12 Rs. Per liter.June – 30 closing inventory. 1,30,000 liters.Using the information given above computethe amount of cost of goods sold for themonth of June using LIFO method.a)Rs. 31,50,000b)Rs. 27,00,000c)Rs. 32,60,000d)Rs. 31,80,000Correct answer is option 'A'. Can you explain this answer?.

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