Question

From the following information ascertain the opening balance of sundry debtors and closing balance of sundry creditors.

The rate of gross profit is 25% on selling price and out of the total sales Rs. 85,000 was for cash sales. 

Answer 1

Total sales = Cash sales + Credit sales

Total sales = cost of goods sold + Gross profit

Cost of goods sold = opening stock + purchases – closing stock 

= 30,000 + 2,95,000 – 25,000.

= 3,00,000

Gross profit is 25% on sales i.e. 1/4 on sales so 1/3 on cost i.e. 1/4-1 = 1/3

Gross profit = 3,00,000 * 1/3 = 1,00,000

Total sales = 3,00,000 + 1,00,000

= 4,00,000 

Total sales = cash sales + credit sales

4,00,000 = 85,000 + credit sales

Credit sales = 4,00,000 – 85,000

= 3,15,000