VALUATION OF INVENTORIES AT BALANCE SHEET DATE
Q.1. Following information is available from the books of accounts a trading firm :
|Purchases during the year||3,25,000|
|Stock on 1.1.2009 valued at||75,520|
|Sales during the year||4,55,620|
At the time of valuation of stock for 2008, a portion of the stock costing Rs. 15,000 was valued at Rs. 13,590. One third of this stock was sold in 2009 for Rs. 5,620. Calculate the value of stock: (i) at cost and (ii) at cost or market price whichever is less assuming that goods are sold at 50% profit on sale price.
[Ans. (i) At cost —Rs. 1,71,930 (ii) At cost or market whichever is less — Rs. 1,70,990]
Q.2. From the following particulars, ascertain the value of stock as on 31 March, 09 :
|Stock as on 1.4.08||14,250|
At the time of valuing the stock as on 31 March, 2008, a sum of Rs. 1,750 was written off a particular item, which was originally purchased for Rs. 5,000 and was sold during the year for Rs. 4,500. Barring the transaction, relating to this item, the gross profit earned during the year was 20 per cent on sales.
[Ans. Stock-in-Trade as on 31 March 2009 . Rs. 6,250.]
Q.3. From the following information, ascertain the value of stock as on 31.3.2007 :
|Value of Stock on 1.4.2006||70,000|
|Purchases during the period from 1.4.2006 to 31.3.2007||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 31.3.06, 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 above transaction the, gross profit earned during the year was 25% on cost.
[Ans. Value of physical stock as on 31.3.2007 Rs. 67,200.]
Q.4. Karam Chand closed his books of account for the year on 31 March, 2009. Due to certain difficulties, he could not conduct stock taking on that date. Actual stock taking was done on 7 April, 2009 when goods valued at Rs. 34,500 were found present in the godowns.
The following transactions had taken place during the period from 1 April, 2009 to 7 April 2009:
(i) Sales during the period were Rs. 10,590. These goods were sold at the usual rate of gross profit of 25% on cost except goods which realised Rs. 840 on the basis of 20% profit on cost.
(ii) Purchases during the period were Rs. 8,300 of which Rs. 1,180 worth of goods were delivered to Karam Chand only on 9 April, 2009.
(iii) Sales returns during the period were Rs. 600. Out of it Rs. 300 worth of returns were out of the sales made at 20% gross profit mentioned above.
Prepare a statement showing clearly the value of stock on 31 March, 2009 to be shown in the final accounts prepared by Karam Chand.
[Ans. Rs. 35,390.]
Q.5. Physical verification of stock in a business was done on 23 June, 2009. The value of the stock was Rs. 4,80,000. The following transactions took place between 23 June to 30 June, 2009 :
(i) Out of the goods sent on consignment, goods at cost worth Rs. 24,000 were unsold.
(ii) Purchases of Rs. 40,000 were made out of which goods worth Rs. 16,000 were delivered on 5 July, 2009.
(iii) Sales were Rs. 1,36,000, which include goods worth Rs. 32,000 sent on approval. Half of these goods were returned before 30 June, 2009, but no information is available regarding the remaining goods.
(v) 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 30 June, 2009.
[Ans. Value of stock on 30 June, 2009 is Rs. 4,46,400.]
Q.6. A trader prepared his accounts on 31 March, each year. Due to some unavoidable reasons, no stock taking could be possible till 15 April, 2009 on which date the total cost of goods in his godown came to Rs. 50,000. The following facts were established between 31 March and 15 April, 2009 :
(i) Sales Rs. 41,000 (Including cash Sales Rs. 10,000)
(ii) Purchases Rs. 5,034 (Including cash purchases Rs. 1,990)
(iii) Sales Return Rs. 1,000.
(iv) On 15 March, goods of the sale value of Rs. 10,000 were sent on sale or return basis to a customer, the period of approval being four weeks. He returned 40% of the goods on 10 April, approving the rest; the customer was billed on 16 April.
(vi) A trader had also received goods costing Rs. 8,000 in March, for sale on consignment basis; 20% of the goods had been sold by 31 March, and another 50% by the 15 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 31 March, 2009.
[Ans. Value of inventory as on 31 March, 2009 is Rs. 79,366.]
Q.7. Mr. Vijay's financial year ends on 30 June 2007 but actual stock is not taken until the following 8 July 2007 when it is ascertained at Rs. 7,425.
You find that.
(i) Sales are entered in the sales book on the same day as despatched and returns inward in return inward book when the goods are received back,
(ii) Purchases are entered in the purchases day book as the invoices are received.
(iii) Sales between 30 June and 8 July 2007 as per sales day book and cash book are Rs. 8,600.
(iv) Purchases between 30 June and 8 July as per purchases day book are Rs. 660 but of these goods amounting to Rs. 60 are not received until after the stock was taken,
(v) Goods invoiced during June (before 30 June) but not received until after 30 June amounted to Rs. 500 of which Rs. 350 worth are received between 30 June and 8 July 2007.
(vi) Rate of Gross Profit is 33-1/3% on cost. Ascertain the value of stock on 30.6.2007.
[Ans. Rs. 13,425.]
Q.8. X who was closing his books on 31.3.2009 failed to take the actual stock which he did only on 9 April, 2009, when it was ascertained by him to be worth Rs. 25,000. It was found that sales are entered in the sales book on the same day of despatch and return inwards in the returns book as and when the goods are received back. Purchases are entered in the purchases day book once the invoices are received. It was found that sales between 31.3.2009 and 9.4.2009 as per the sales day book are Rs. 1,720. Purchases between 31.3.2009 and 9.4.2009 as per purchases day book are Rs. 120, out of these goods amounting to Rs. 50 were not received until after the stock was taken. Goods invoiced during the month of March, 2009 but goods received only on 4 April, 2009 amounted to Rs. 100. Rate of gross profit is 33-1/3% on cost. Ascertain the value of physical stock as on 31.3.2009.
[Ans. Valuation of physical stock on 31.3.2009-Rs. 26,120.]