Question

If sales are $Rs.6,00,000$; Gross profit is $1/3$ on cost; Purchases are $Rs.4,90,000$ and the Closing stock is $Rs.90,000$, then the opening stock will be_________.

• A. Nil
• B. $Rs.50,000$
• C. $Rs.2,00,000$
• D. $Rs.4,90,000$

Answer 1

Answer: (B)

$Rs.50,000$

Solution can be represented as:

Sales= Cost of Goods Sold +Gross Profit

Assuming COGS is Rs.100

Gross Profit will be 1/3 of Rs.100 i.e.33.33

Therefore

Sales =Rs.100+Rs.33.33 i.e. Rs.133.33

If we calculate the Gross Profit on Sales that becomes = GP/Sales*100

=33.33/133.33*100

i.e. Gross Profit will be 25% on sales

Sales= Rs.600000

Gross Profit= 25% of Rs.600000 i.e. Rs.150000

Cost of Goods Sold= Sales-Gross Profit

= Rs.600000-Rs.150000

= Rs.450000

Now, to find out the opening stock, below equation help us:

Cost of Goods Sold= Op Stock+Purchases-Closing Stock

450000=Op Stock+490000-Rs.90000

450000=Op Stock+ Rs.400000

Op Stock = Rs.450000-Rs.400000

Opening Stock =Rs.50000.