TOTALE’S COMMERCE ACADEMY INVENTORIES

TOTALE’S COMMERCE ACADEMY

Q.1) A trader prepared his account on 31st March, each year. Due to some unavoidable reasons no stock taking could be possible
till 15th April 20X2 on which date the total cost of goods in his godown came to Rs 50,000. The following facts established
between 31st March and 15th April, 20X2.
1. Sales Rs 41,000 (including cash sales Rs 1,000)
2. Purchases Rs 5,034 (including cash purchases Rs 1,990) 3. Sales Return Rs 1,000.
4. On 15th March goods of sale value of Rs 10,000 were sent on sale or return basis to a customer, period of approval being four
weeks. He returned 40% of goods on 10th April, approving the rest ; the customer was billed on 16th April.
5. The trader had also received goods costing Rs 8,000 in March for sale on consignment basis ; 20% of the goods had been sold
by 31st March, and another 50% by the 15th April these sales are not included in above sales.
Goods are sold by the trader at a profit of 20% on sales.
You are required to ascertain the value of Inventory as on 31st March 20X2. (5 Marks)

Q.2) From the following information, ascertain the value of stock as on 31.3.20X2 :
Value of stock on 1.4.20X1 70,000
Purchases during the period from 1.4.20X1 3,46,000
Manufacturing expenses during the above period 70,000
Sales during the same period 5,22,000
At the time of valuing stock on 31.3.20X1, a sum of Rs 6,000 was written off a particular item which was originally
purchased for Rs. 20,000 and was sold for Rs 16,000. But for the other transaction the gross profit earned during the
year was 25% on cost. (4 Marks)

Q.3) Physical verification of stock of business was done on 23rd June, The value of the stock was Rs 4,80,000. The following
transactions took place between 23rd June to 30th June:
1. Out of the goods sent on consignment goods at cost worth Rs 24,000 were unsold.
2. Purchases of Rs 40,000 were made out of which goods worth Rs 16,000 were delivered on 5th July.
3. Sales were Rs 1,36,000 which include goods worth Rs 32,000 sent on approval. Half of these goods were returned before 30th
June. But no information is available regarding the remaining goods.
4. Goods are sold at cost plus 25% however goods costing Rs 24,000 had been sold for Rs 12,000.
Determine the value of stock on 30th June. (6 Marks)

Q.4) The profit and Loss Account of Hanuman showed a net profit of Rs 60,000, after considering the closing stock of Rs 37,500
on 31st March, 20X2. Subsequently the following information was obtained from scrutiny of the books:
1. Purchases for the year included Rs 1,500 paid for new electric fitting for the shop.
2. Hanuman gave away goods valued at Rs 4,000 as free samples for which no entry was made in books of accounts.
3. Invoices for goods amounting to Rs 25,000 have been entered on 27th March, but goods were not included in stock.
4. In March, goods of Rs 20,000 sold and delivered were taken in sales for April, 20X2.
5. Goods costing Rs 7,500 were sent on sale or return in March, 20X2 at a margin of profit of 33 1/3% on cost. Though approval
was given in April, these were taken as sales for March.
Required: Calculate value of stock on 31st March, 20X2 and the Adjusted Net Profit for the year ended on that date. (5 Marks)

Q.5) Krishna Udyog Limited makes up its accounts to December 31 each year. The company was unable to take
Stock by physical inventory till 14th January, 1998 on which date the stock it cost was valued at Rs 1,85,000.
It was, therefore, necessary to estimate the value of stock in hand as on December 31, 1997.You ascertain the following facts
regarding the period January 1 to January 14, 1998:
1. Purchases totaled Rs 48,000 and included: (i) Rs 5,000 in respect of goods received in December, 1997:
(ii) Rs. 6,000 in respect of goods received on January 19, 1998; (iii) Rs 2,000 in respect of goods received but returned to
suppliers on January 7, 1998 for which no credit note has been received or passed through books.
2. Sales totaled Rs 60,000 and included: (i) Rs 1,500 in respect of goods which left the warehouse on December 28, 1997; (ii) Rs
2,800 in respect of goods which were not dispatched until January 16, 1998; (iii) Rs. 750 in respect of goods invoiced and
dispatched on January 10, 1998 but returned by customers on January 12, for which no credit note had been passed but which
were, in fact, included in stock taken on January 14, 1998.
3. Other returns to suppliers totaled Rs 1,400 and other returns by customers were Rs 450.
4. The rate of gross profit was 20% on the selling price with the exception of an isolated purchase on January 7, 1997 of 100
similar articles which had cost Rs. 11,000. Of these articles, 50 were sold on January 7, 1998 for Rs 6,500 and the remainder
had been included at cost in the stock taken on January 14,1998.
Prepare a statement showing the estimated value of stock held on December 31, 1997 at cost. (10 Marks)

Q.6) State with Reasons whether following statements are True or False : (5*2 = 10 Marks)
a) Finished Goods are normally valued at Cost or Market Price whichever is Higher.
b) Inventory of By-products should be valued at Net Realizable Value where Cost of By-products can be separately determined.
c) Damaged Inventory should be valued at Cost or Market Price whichever is Higher.
d) Valuation of Inventory at Cost or Net Realizable Value is based on Principle of Conservatism.
e) Warehouse Rent paid for Storage of Finished Inventory should be included in the Cost of Finished Inventory.

TOTALE’S COMMERCE ACADEMY INVENTORIES

(4 Marks)

Q.8)

(8 Marks)

Q.9)

(8 Marks)

TOTALE’S COMMERCE ACADEMY INVENTORIES