Question

A firm sells goods at a Gross profit of 25% of sales. On 1st April, 2017 the Stock was ₹40,000; Purchases were ₹1,10,000 and the Stock on 31st March, 2018 was ₹30,000. What was the value of Sales?

Answer 1

Cost of Goods Sold = Net Sales – Gross Profit
Cost of Goods Sold = Opening Stock + Purchases – Closing Stock
Cost of Goods Sold = 40,000 + 1,10,000 – 30,000 = ₹ 1,20,000
Gross Profit = 25% of Sales or 33.33% of COGS
Gross Profit = ₹ 40,000
Net Sales = Cost of Goods Sold + Gross Profit
Net Sales = 1,20,000 + 40,000 = ₹ 1,60,000