Question

Calculate Opening Inventory from the following information:

Purchases ₹ 5,70,000; Freight ₹ 20,000; Miscellaneous Expenses ₹ 10,000; Revenue from Operations (Sales) ₹ 5,00,000; Closing Inventory ₹ 70,000; Gross Loss 16% on Revenue from Operations.

Answer 1

Cost of Revenue from Operations = Revenue from Operations + Gross Loss

= ₹ 5,00,000 + 16% of ₹ 5,00,000

= ₹ 5,00,000 + ₹ 80,000

= ₹ 5,80,000

Cost of Revenue from Operations = Opening Inventory + Purchases + Direct Expenses − Closing Inventory

₹ 5,80,000 = Opening Inventory + ₹ 5,70,000 + ₹ 20,000 − ₹ 70,000

Opening Inventory = ₹ 5,80,000 − ₹ 5,20,000

= ₹ 60,000