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CA Foundation · Accounting · Inventories

Stock was counted on 5 April at ₹2,40,000 at cost. Between 1 April and 5 April, sales were ₹50,000 at a profit of 25% on sales, and purchases were ₹30,000. What is the stock at cost on 31 March?

Work backwards from the count date. Cost of sales is ₹37,500 (75% of ₹50,000). Adding it to ₹2,40,000 and deducting purchases of ₹30,000 gives stock at 31 March of ₹2,47,500.

  1. A₹2,47,500Correct
  2. B₹2,32,500
  3. C₹2,52,500
  4. D₹2,22,500

Explanation

Sales at cost = 50,000 × 75% = ₹37,500. Stock on 31 March = stock on 5 April + cost of goods sold - purchases = 2,40,000 + 37,500 - 30,000 = ₹2,47,500. Wrong sign on purchases and sales gives the other values.

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