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Pls suggest me which s right approach.....!!!!

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Querist : Anonymous

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Querist : Anonymous (Querist)
26 November 2012 D question s
Consider the following data pertaining to R ltd. for the month of June 2011

Opening stock - 30,000
Closing stock - 40,000
Purchases - 5,60,000
Return outwards - 15,000
Return inward - 20,000
Carriage inward - 5,000

If the gross profit is 20% of net sales , the gross sales for the month of June 2011 is what........????/

Ist approach :
Opening stock + purchases + carriage inward - return outward - closing stock = 5,40,000.....which I considered it as 80% of sales.....den for 100% we should calculate it as 5,40,000/.8 = 6,75,000.....!!!! Then with this amt add the net sales , then we get 6,95,000 as
gross sales ......!!!!

IInd approach :

Opening stock + purchases +
carriage inward - return outward - closing stock = 5,40,000...then nw less less 20% from return inward....so tat we can get the cost of goods returned .......!!!! So add this to 5,40,000 i.e 5,40,000+16,000=5,56,000......!!!! Then nw 5,56,000/.8 = 6,95,000.....!!!!!

Nw plzzz suggest me which one is right approach .......?????
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Preety Chawda

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Preety Chawda (Expert)
27 November 2012 II nd approach is correct one. Even the Return Inward is to be shown at cost to reflect correct Gross Profit
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