From the following information, calculate opening inventory.

Revenue from Operations = 4,00,000
Gross Profit Ratio = 10%
Carriage outwards = 2,000
Closing Inventory = 75,000
Purchases of stock in trade = 3,50,000

₹85,000

The correct answer is Option (1) → 85,000

Gross Profit Ratio = Gross Profit/Net Revenue from Operations ×100
                       10 = Gross profit/400000 x 100
Gross profit = 10 x 4,00,000/100
                   = 40,000

Cost of goods sold = Revenue from operations - gross profit
                               = 4,00,000 - 40,000
                               = 3,60,000

Cost of goods sold = Opening inventory + purchases - closing inventory
               3,60,000  = Opening inventory + 3,50,000 - 75,000
Opening inventory = 3,60,000 -3,50,000 +75,000
                              = 85,000

CARRIAGE OUTWARDS ARE INDIRECT EXPENSE SO NOT DEDUCTED WHILE CALCULATING COST OF GOODS SOLD.