Question

The cost of inventory as per physical verification as on 24th March was Rs.4,00,000. Goods are sold at a profit of 25%on cost.
On 21st March, goods on the sales value of Rs.1,00,000 were sent on sale on return basis to a customer , the period of approval being two week .He returned 20% of the goods on 31st March.
The cost of inventory as per books on 31st march is ______________.

• A. Rs.4,80,000
• B. Rs.4,16,000
• C. Rs.4,28,000
• D. None of these

Answer 1

The correct option is B Rs.4,16,000

In case of sale or return basis the goods that are confirmed as sales and the rest are included in inventory at cost.

Calculation of goods to be included at cost and their value :-

Goods not approved = 1,00,000 x 20%

= 20,000

Calculation of book value of unapproved goods

Lets assume,

Cost = 100, Gross profit = 25% of cost

= 25

Therefore, sales = Cost + gross profit

= 100 + 25

= 125

Hence, we have sales price cost will be = 20000 x 100/125

= 16,000

Cost of inventory as on 31st march = 4,00,000 + 16,000

= 4,16,000