Question

Mr. Biggs bought several lots of inventory throughout a period for the following amounts Rs. 1,100, Rs. 2,200, Rs. 3,300, Rs. 4,400. He made sales on credit throughout this period of Rs. 1,100, Rs. 2,200, Rs. 3,300, Rs. 4,400. He sells inventory at cost plus 25%. His closing inventory at the end of the period is valued at:

• A. 0
• B. Rs. 4,400
• C. Rs. 2,200
• D. Rs. 3,300

Answer 1

The correct option is C

Rs. 2,200

Opening Inventory
= Rs. 1,100 + Rs. 2,200 + Rs. 3,300 + Rs. 4,400
= Rs. 11,000

Sales
= Rs. 1,100 + Rs. 2,200 + Rs. 3,300 + Rs. 4,400
= Rs. 11,000

Profit = $Rs.11,000\times \frac{20}{100}$ = Rs. 2,200

Closing Inventory
= Opening Inventory + Profit - Sales

= Rs. 11,000 + Rs. 2,200 - Rs. 11,000

= Rs. 2,200