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.

₹34,000

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