143 :- (i) Revenue from Operations: Cash Sales Rs 4,20,000; Credit Sales Rs 6,00,000; Return Rs 20,000. Cost of Revenue from Operations or Cost of Goods Sold Rs 8,00,000. Calculate Gross Profit Ratio.
(ii) Average inventory Rs 1,60,000; Inventory Turnover Ratio 6 Times; Selling Price 25% above cost. Calculate Gross Profit Ratio.
(iii) Opening Inventory Rs 1,00,000; Closing Inventory Rs 60,000; Inventory Turnover Ratio 8 Times; Selling Price 25% above cost. Calculate Gross Profit Ratio.
Solution :-
CASE 1
Net Revenue from Operation = Cash Sales + Credit Sales – Sales Return
= 4,20,000 + 6,00,000 – 20,000
= Rs 10,00,000
Cost of Goods Sold = Rs 8,00,000
Gross Profit = Net Revenue from Operations – Cost of Goods Sold
= 10,00,000 – 8,00,000
= Rs 2,00,000
Gross Profit Ratio = Gross Profit/Revenue from Operations x 100
= 2,00,000/10,00,000 x 100
= 20%
CASE 2
Inventory Turnover Ratio = Cost of Goods Sold/Average Inventory
6 = Cost of Goods Sold/1,60,000
Cost of Goods Sold = Rs 9,60,000
Revenue from Operations = Cost of Goods Sold + 25% of Cost of Goods Sold
= 9,60,000 + 25/100 x 9,60,000
= 9,60,000 + 2,40,000
= Rs 12,00,000
Gross Profit = Revenue from Operation – Cost of Goods Sold
= 12,00,000 – 9,60,000
= Rs 2,40,000
Gross Profit Ratio = Gross Profit/Revenue from Operation x 100
= 2,40,000/12,00,000 x 100
= 20%
CASE 3
Inventory Turnover Ratio = Cost of Goods Sold/Average Inventory
8 = Cost of Goods Sold/80,000
Cost of Goods Sold = Rs 6,40,000
Revenue from Operation = Cost of Goods Sold + 25% of Cost of Goods Sold
= 6,40,000 + 25/100 x 6,40,000
= Rs 8,00,000
Gross Profit = Revenue from Operation – Cost of Goods Sold
= 8,00,000 – 6,40,000
= Rs 1,60,000
Gross Profit Ratio = Gross Profit/Revenue from Operation x 100
= 1,60,000/8,00,000 x 100
= 20%