Question

In 2012 the value of the closing stock was Rs. 1,05,000 without making adjustments for the following:

(1) Purchases made during the two weeks after 31st March, 2012 were Rs. 5,000.

(2) Sales made during these two weeks amounted to Rs. 30,000. The firm makes a gross profit of 33 1/3% on sales. Find out the value of the closing stock on 31st March, 2012.

• A. Rs. 1,05,000
• B. Rs. 1,10,000
• C. Rs. 1,20,000
• D. Rs. 1,15,000

Answer 1

Answer: (C)

Rs. 1,20,000

When any firm refers to its stock be it opening or closing, only the purchases are considered that time because purchasse of goods directly affects the stock value whereas sale has an indirect effect on the stock.

Hence, closing stock is calculated as under:

$ClosingStock=Incorrectstockvalue-Purchases+Sales$

Substitute values in the above equation

$ClosingStock=Rs1,05,000-Rs5,000+Rs20,000=Rs1,20,000$