PRC-1 · Chapter 7 · Question 8 of 100
The following data relates to ABC Enterprises: Opening Stock Rs. 25,000; Purchases Rs. 500,000; Sales Rs. 525,000. The business consistently earns a 25% gross margin on sales. What is the estimated value of closing inventory?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 131,250
Explanation
Cost of Sales = Sales (525,000) x 75% = 393,750. Goods available for sale = Opening Stock (25,000) + Purchases (500,000) = 525,000. Closing Stock = Goods available (525,000) - Cost of Sales (393,750) = Rs. 131,250.
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