Accountancy

Calculate Inventory Turnover Ratio from the following information: Opening Inventory Rs. 40,000; Purchases Rs. 3,20,000; and Closing Inventory Rs. 1,20,000. State, giving reason, which of the following transactions would (i) increase, (ii) decrease, (iii) neither increase nor decrease the Inventory Turnover Ratio: (a) Sale of goods for Rs. 40,000 (Cost Rs. 32,000). (b) increase in the value of Closing Inventory by Rs. 40,000. (c) Goods purchased for Rs. 80,000. (d) Purchases Return Rs. 20,000. (e) goods costing Rs. 10,000 withdrawn for personal use. (f) Goods costing Rs. 20,000 distributed as free samples.

SOLUTION Cost of Goods Sold = Opening Stock + Purchases + Closing Stock= 40,000 + 3,20,000 − 1,20,000= 2,40,000 Average Stock= Opening Stock + Closing Stock / 2 =40,000+1,20,000 / 2=80,000Stock turnover…

Continue ReadingCalculate Inventory Turnover Ratio from the following information: Opening Inventory Rs. 40,000; Purchases Rs. 3,20,000; and Closing Inventory Rs. 1,20,000. State, giving reason, which of the following transactions would (i) increase, (ii) decrease, (iii) neither increase nor decrease the Inventory Turnover Ratio: (a) Sale of goods for Rs. 40,000 (Cost Rs. 32,000). (b) increase in the value of Closing Inventory by Rs. 40,000. (c) Goods purchased for Rs. 80,000. (d) Purchases Return Rs. 20,000. (e) goods costing Rs. 10,000 withdrawn for personal use. (f) Goods costing Rs. 20,000 distributed as free samples.

Rs. 2,00,000 is the Cost of Revenue from Operations (Cost of Goods Sold), during the year. If Inventory Turnover Ratio is 8 times, calculate inventories at the end of the year. Inventories at the end is 1.5 times that of in the beginning.

SOLUTION Inventory turnover ratioCost of Goods sold /  Average Inventory8= 2,00,000 / Average InventoryAverage Inventory= 25,000 Let Opening Inventory = xClosing Inventory = 1.5 × x = 1.5 x Average InventoryOpening Inventory + Closing…

Continue ReadingRs. 2,00,000 is the Cost of Revenue from Operations (Cost of Goods Sold), during the year. If Inventory Turnover Ratio is 8 times, calculate inventories at the end of the year. Inventories at the end is 1.5 times that of in the beginning.

From the following data, calculate Inventory Turnover Ratio: Total Sales Rs. 5,00,000; Sales Return Rs. 50,000; Gross Profit Rs. 90,000; Closing Inventory Rs. 1,00,000; Excess of Closing Inventory over Opening Inventory Rs. 20,000.

SOLUTION Cost of Goods Sold = Net Sales (Sales – Sales Return) – Gross Profit= 5,00,000 – 50,000 – 90,000= Rs. 3,60,000  Closing Inventory = 1,00,000Closing Inventory is Rs. 20,000 more than the Opening InventoryTherefore, Opening Inventory = 80,000 (1,00,000…

Continue ReadingFrom the following data, calculate Inventory Turnover Ratio: Total Sales Rs. 5,00,000; Sales Return Rs. 50,000; Gross Profit Rs. 90,000; Closing Inventory Rs. 1,00,000; Excess of Closing Inventory over Opening Inventory Rs. 20,000.

Revenue from Operations Rs. 4,00,000; Gross Profit Rs. 1,00,000; Closing Inventory Rs. 1,20,000; Excess of Closing Inventory over Opening Inventory Rs. 40,000. Calculate Inventory Turnover Ratio.

SOLUTION Sales 4,00,000Gross Profit1,00,000 Cost of Goods SoldSales − Gross Profit= 4,00,000 − 1,00,000 = 3,00,000  Let Opening Inventory xClosing Inventory x + 40,0001,20,000 x + 40,000X80,000Opening Inventory80,000 Average Inventory =(Opening Inventory + Closing Inventory )…

Continue ReadingRevenue from Operations Rs. 4,00,000; Gross Profit Rs. 1,00,000; Closing Inventory Rs. 1,20,000; Excess of Closing Inventory over Opening Inventory Rs. 40,000. Calculate Inventory Turnover Ratio.

From the following information, calculate Inventory Turnover Ratio:

ParticularsAmount(Rs.) Revenue from Operations16,00,000 Average Inventory2,20,000 Gross Loss Ratio 5% SOLUTION Cost of Revenue from OperationsRevenue from Operations + Gross Loss = 16,00,000 + 80,000= Rs. 16,80,000 Inventory Turnover RatioCost of Revenue from Operations / Average Inventory= 16,80,000 / 2,20,000= 7.64Times

Continue ReadingFrom the following information, calculate Inventory Turnover Ratio:

Calculate Inventory Turnover Ratio from the following information: Opening Inventory is Rs. 50,000; Purchases Rs. 3,90,000; Revenue from Operations, i.e., Net Sales Rs. 6,00,000; Gross Profit Ratio 30%.

SOLUTION Cost of Goods Sold = Net Sales – Gross Profit= 6,00,000 – 30% of Rs. 6,00,000= 6,00,000 – 1,80,000= 4,20,000Cost of Goods Sold = Opening Inventory + Purchases – Closing Inventory4,20,000 = 50,000 +…

Continue ReadingCalculate Inventory Turnover Ratio from the following information: Opening Inventory is Rs. 50,000; Purchases Rs. 3,90,000; Revenue from Operations, i.e., Net Sales Rs. 6,00,000; Gross Profit Ratio 30%.

Cost of Revenue from Operations (Cost of Goods Sold) Rs. 5,00,000; Purchases Rs. 5,50,000; Opening Inventory Rs. 1,00,000. Calculate Inventory Turnover Ratio.

SOLUTION Cost of Goods Sold = Opening Inventory + Purchases − Closing Inventory5,00,000 = 1,00,000 + 5,50,000 − Closing InventoryClosing Inventory = 1,50,000 Average StockOpening Stock + Closing Stock / 2…

Continue ReadingCost of Revenue from Operations (Cost of Goods Sold) Rs. 5,00,000; Purchases Rs. 5,50,000; Opening Inventory Rs. 1,00,000. Calculate Inventory Turnover Ratio.