Question

	(Rs.)
Opening stock	25, 000
Credit purchase	7,50,000
Cash purchase	3,00,000
Credit sales	12,00,000
Cash sales	4,00,000
Wages	1,00,000
Salaries	1,40,000
Closing Stock	30,000
Sales return	50,000
Purchase return	10,000

From the following balances extracted from the books of M / s Ahuja and Nanda. Calculate the amount of
(a) Cost of goods available for sale
(b) Cost of goods sold during the year
(c) Gross Profit

Answer 1

(a) Cost of goods available for sales which means total goods produced during the year.
Cost of Production = (opening stock + Purchase + Wages - Purchase Return)
= 25,000 + (7,50,000 + 3,00,000) + 1,00,000 - 10,000
= Rs. 11,65,000
(b) Cost of goods sold = Cost of Production - Closing Stock
i.e., 11,65,000 - 30,000 = Rs. 11,35,000
(c) Gross Profit For computing gross profit, preparation of Trading account would be appropriate.