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Can anyone explain me this problem?
Accountancy
I am unable to understand the solution.
Answers (5)
There were certain items as opening stock (15,000), add to that the purchases of 85,000, we have the total cost of articles with us as 100,000. Add the profit of 25% on cost (100,000 x 25% = 25,000), we get the sales value of articles (125,000), subtract from this the sales (105,000), we get the sales value of stock with us (125,000 - 105,000 = 20,000), this is the sale value. Profit added on this is 20,000 x 20% = 4,000. This is because profit of 25% on cost = 20% on sales. So sales value (20,000) less profit (4,000) = cost of closing inventory (16,000)
Sarthak Aggarwal
There were certain items as opening stock (15,000), add to that the purchases of 85,000, we have the total cost of articles with us as 100,000. Add the profit of 25% on cost (100,000 x 25% = 25,000), we get the sales value of articles (125,000), subtract from this the sales (105,000), we get the sales value of stock with us (125,000 - 105,000 = 20,000), this is the sale value. Profit added on this is 20,000 x 20% = 4,000. This is because profit of 25% on cost = 20% on sales. So sales value (20,000) less profit (4,000) = cost of closing inventory (16,000)
Is 20000 remaining part that we have to consider as closing stock
Thread Starter
Snehashis MohantyIs 20000 remaining part that we have to consider as closing stock
yes that is selling price of closing stock from which we will remove profit
Sarthak Aggarwal
yes that is selling price of closing stock from which we will remove profit
And what is the 25%cost=20%on sale principle
Thread Starter
Snehashis MohantyAnd what is the 25%cost=20%on sale principle
Lets say you have goods costing Rs 100. Now lets say there is 25% profit on cost = 100 x 25% = 25 Then, the selling price is 100 + 25 = 125. Then percentage profit on selling price is 25/125 x 100 = 20%. hence 25% profit on cost = 20% on sales