CA Foundation · Accounting · Accounts from Incomplete Records
Kiran Stores marks up goods by 33⅓% on cost. Sales for the year were ₹8,00,000. Opening stock was ₹90,000 and closing stock ₹1,10,000. What were the purchases for the year?
Purchases were ₹6,20,000. A 33⅓% mark-up on cost equals 25% of sales, so gross profit is ₹2,00,000 and cost of goods sold is ₹6,00,000. Adding the stock increase of ₹20,000 gives purchases of ₹6,20,000.
- A₹6,20,000Correct
- B₹6,00,000
- C₹6,40,000
- D₹5,80,000
Explanation
Mark-up of 33⅓% on cost means profit is 1/4 of sales = 2,00,000, so COGS = 6,00,000. Purchases = 6,00,000 + 1,10,000 - 90,000 = 6,20,000. Check: 90,000 + 6,20,000 - 1,10,000 = 6,00,000. Option 6,00,000 ignores the stock change.
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