CA Inter P1 · Chapter 13 · Question 10 of 10
Case: Under the stock and debtors system, goods are invoiced to the branch of Udit Ltd at cost plus 20% and sold at invoice price. At invoice price: opening branch stock ₹80,000, goods sent ₹4,00,000, sales ₹3,90,000 and closing stock as per physical count ₹84,000. The shortage of stock at cost is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) ₹5,000
Explanation
Expected closing stock at invoice price = 80,000 + 4,00,000 - 3,90,000 = 90,000. Physical stock is 84,000, so shortage at invoice price = 6,000. At cost = 6,000 x 100/120 = ₹5,000; the loading of 1,000 is reversed through the Branch Adjustment Account.
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