Manish closed his books of account on 31 st March, each year. Inventory taking for the year ended 31 st March, 2024 was completed by 10 th April,…

CA Foundation · Accounting · PYQS · June 2024
Manish closed his books of account on 31 st March, each year. Inventory taking for the year ended 31 st March, 2024 was completed by 10 th April, 2024 on which date value of the stock available in godown was of 4,50,000 at cost. Following are the details of transactions that took place between31 st March, 2024 and 10 th April, 2024: (i) Goods sold to customers - 1,10,000. (ii) Sales return - 10,000. (iii) Purchases - 85,000 (Including Cash Purchases - 10,000). (iv) Purchases return amounted to 2,500. (v) Goods costing - 15,000 received in March, for sale on consignment basis, out of which60% of goods had been sold by 10 th April. These sales are not included in above sales. (vi) After the stock was taken, it was found that there was certain very old slow- moving items costing - 14,850, which should be taken at 9,500 to ensure disposal to an interested customer. Goods are sold at a profit margin of 25% on cost. Ascertain the value of inventory for inclusion in the final accounts for the year ended 31 st March, 2024.

Suggested Answer and Working Notes:

Statement of Valuation of Inventory as on 31 st March, 2024 Particulars Amount (₹) Amount (₹) Value of stock as on 10 th April, 2024 4,50,000 Add: Cost of sales during the period from 31 st March, 2024 to 10 th April, 2024: Sales (₹ 1,10,000-10,000) 1,00,000 Less: Gross profit (25% on cost i.e.20% on sales) (20, 000) 80,000 5,30,000 Less: Purchases during the period from 31 st March, 2024 to 10 th April, 2024 (₹ 85,000-2,500) 82,500 Unsold stock out of goods received on consignment basis (40% of 15,000) 6,000 Loss on revaluation of slow-moving inventories (₹ 14,850 -9,500) 5,350 93,850 4,36,150 ALTERNATE PRESENTATION Statement of Valuation of Inventory as on 31 st March, 2024 Particulars Amount (₹) Amount (₹) Value of stock as on 10 th April, 2024 4,50,000 Add: Cost of sales during the period from 31 st March, 2024 to 10 th April, 2024: Sales 1,10,000 Less: Gross profit (25% on cost i.e.20% on sales) (22, 000) 88,000 Purchase Returns 2,500 5,40,500 Less: Purchases during the period from 31 st March, 2024 to 10 th April, 2024 85,000 Sales Returns 8,000 Unsold stock out of goods received on consignment basis (40% of 15,000) 6,000 Loss on revaluation of slow-moving inventories (₹ 14,850 -9,500) 5,350 1,04,350 4,36,150

Topics: Inventories

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