Question

From the following information, find cost of goods sold and net sales

$\begin{array}{cccc}\text{Opeining stock}& 3,00,000& \text{Wages}& 6,000\\ \text{Purchases}& 8,40,000& \text{Freight}& 10,800\\ \text{Closing stock}& 2,40,000& \text{Carriage inwards}& 3,000\end{array}$

The percentage of gross profit on sales is 20%

Answer 1

Calculation of Cost of Goods Sold

$\begin{array}{cc}\text{Opening Stock}& 3,00,000\\ (+)\text{Purchases}& 8,40,000\\ \text{Wages}& 6,000\\ \text{Freight}& 10,800\\ \text{Carriage Inwards}& \underset{–}{3,000}\\ & 11,59,800\\ (-)\text{Closing Stock}& \underset{–}{2,40,000}\\ \text{Cost of Goods Sold}& \underset{–}{9,19,800}\end{array}$

Working Note:
Calculation of Net Sales
Let sales = Rs. 100, gross profit will be = Rs. 20.
Therefore, cost of sales will be =Rs. 100 - Rs. 20 = Rs. 80.
When cost of sales is Rs. 80, then sales = Rs. 100.
When cost of sales is Re. 1, then sales = Rs. $\frac{100}{80}$
When cost of sales is Rs. 9,19,800, then sales
= Rs. $\frac{100}{80}\times 9,19,800$
= Rs. 11,49,750