In the following cases, find the value of closing stock as per AS 2: (i) Sonu is a retailer dealing in toys. During the year, he purchased items…

CA Intermediate · Advanced Accounting · MTP · May 2026
In the following cases, find the value of closing stock as per AS 2: (i) Sonu is a retailer dealing in toys. During the year, he purchased items worth for 1,47,000 and made a total sale - 1,54,000. The average percentage of gross margin is 10% on cost. Opening stock of toys at cost was - 20,000. (ii) On 21st March, 2026, Mohan purchased 250 chairs at 300 each. The selling price of the chair is 400 each. Owing to a manufacturing defect, net realisable value of the whole lot of chair was determined at 70% of their normal selling price. No chairs were sold during the year.

Suggested Answer and Working Notes:

(i) Cost of closing inventory is shown below: Particulars ₹ Sale value of opening stock and purchases (₹ 20,000 +1,47,000) x 1.10 1,83,700 Sales (1,54,000) Sale value of unsold stock 29,700 Less: Gross Margin (₹ 29,700 / 1.10) x 0.10 (2,700) Cost of closing inventory 27,000 Alternative presentation Cost of closing inventory is shown below: Particulars ₹ Opening stock and purchases (₹ 20,000 +1,47,000) 1,67,000 Less: cost of goods sold (1,40,000) Cost of closing inventory 27,000 (ii) Calculation of cost of goods sold Particulars ₹ Goods sold 1,54,000 Less: gross margin (1,54,000 X 10/110) (14,000) Cost of goods sold 1,40,000 (ii) Closing stock at cost (250X 300) 75,000 Net Realizable value of closing stock (₹ 280 × 250) 70,000 (ii) Value of closing stock [lower of (i) and (ii)] 70,000

Topics: AS 2, AS 13

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