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CMA Intermediate · Corporate Accounting and Auditing · Audit of Various Items of Financial Statements

A company's physical stock count was done on 5 April, five days after the balance sheet date of 31 March. Stock count value was Rs 12,00,000. Between 1 April and 5 April, purchases of Rs 1,50,000 at cost were received and goods costing Rs 2,10,000 were sold (sales at a markup so recorded sales were Rs 2,52,000). What is the inventory value at 31 March at cost?

Inventory at 31 March is Rs 12,60,000. Starting from the count of Rs 12,00,000 on 5 April, add back the cost of goods sold in the interval, Rs 2,10,000, and deduct purchases received in the interval, Rs 1,50,000. Sales must be taken at cost, not at selling price.

  1. ARs 11,40,000
  2. BRs 12,60,000Correct
  3. CRs 11,58,000
  4. DRs 12,00,000

Explanation

Work back from the count date: closing at 31 March = count value + cost of goods sold after year-end - purchases after year-end = 12,00,000 + 2,10,000 - 1,50,000 = Rs 12,60,000. Rs 11,40,000 reverses the signs. Rs 11,58,000 uses sales value instead of cost.

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