Revenue from Operations ₹2,00,000; Inventory Turnover Ratio 5; Gross Profit 25%. Find out the value of Closing Inventory, if Closing Inventory is ₹8,000 more than the Opening Inventory.
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹34,000.
Cost of Revenue from Operations = Revenue From operations- Gross Profit
= 2,00,000-25% of 2,00,000
= 200000 - 50000
= 1,50,000
Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory
5 = 1,50,000/Average Inventory
Average Inventory = 30,000
Let Opening Stock = X
Closing Stock = X+8,000
Average Stock = (Opening Stock+ Closing Stock)/2
30,000 = (X+X+8,000)/2
30,000 = (2X +8,000)/2
30,000 = X + 4,000
X = 26,000
Closing Inventory = 26,000 + 8,000
= 34,000