CAF-1 · Chapter 12 · Question 11 of 15
A warehouse fire destroyed a portion of inventory. Opening inventory was Rs. 200,000 and purchases were Rs. 800,000. Based on the sales and margin, the Cost of Goods Sold was Rs. 850,000. The undamaged inventory counted after the fire was Rs. 50,000. What was the cost of the inventory destroyed?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Rs. 100,000
Explanation
Expected closing inventory = Opening (200,000) + Purchases (800,000) - COGS (850,000) = Rs. 150,000. Since only Rs. 50,000 remained physically, the destroyed inventory is Rs. 150,000 - 50,000 = Rs. 100,000.
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