Question

A business concern provides the following details.
Cost of goods sold - Rs. 1,50,000
Sales - Rs. 2,00,000
Opening stock - Rs. 60,000
Closing stock - Rs. 40,000
Debtors - Rs. 45,000
Creditors - Rs. 50,000
The concerns, purchases would amount to (in Rs.) ____________.

• A. 1, 30,000
• B. 2,20,000
• C. 2,60,000
• D. 2,90,000

Answer 1

The correct option is A 1, 30,000

This can be represented by below equation:

Opening Stock+Purchases-closing stock=Cost of Goods sold

Putting the available information in the equation:

Rs.60000+Purchases-Rs.40000=Rs.150000

Rs.60000-Rs.40000+Purchases=Rs.150000

Rs.20000+Purchases=Rs.150000

Purchases=Rs.150000-Rs.20000

Purchases =Rs.130000.