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    Question

    Company Victory commenced operations and it purchased g

    oods worth ₹1,00,000 . During the year, the it could make sales worth ₹90,000. If the company’s m argin on cost is 20%, what is its c losing Inventory? 
    A ₹20,000 Correct Answer Incorrect Answer
    B ₹10,000 Correct Answer Incorrect Answer
    C ₹25,000 Correct Answer Incorrect Answer
    D ₹15,000 Correct Answer Incorrect Answer
    E ₹30,000 Correct Answer Incorrect Answer

    Solution

    Explanation :   
    Let Cost = 100, Margin = 20%, so Sales = ₹120.   
    Cost to Sales ratio = 100 / 120 = 5/6   
    Given Sales = ₹90,000 → Cost of Goods Sold = 90,000 × 5/6 = ₹75,000   
    Purchases = ₹1,00,000   
    Closing Inventory = Opening Inventory + Purchases – Cost of goods sold    = 0 + 1,00,000 - 75,000 = ₹25,000 

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