I have received accounts of one propriotory concern who deals in paper bags and stationary. Earlier accountant was not following the method of unit wise entry into tally package. Now my problem is how to find out Closing Stock every month. (Earlier Accountant used to calculate on lumpsum basis). Please guide me as to which method to use to calculate closing stock when purchase, sales and opening stock is given (all including GST)
suppose his sales for the month is 125143, purchase is 29778 and opening stock is 439980. CA has shown 363500 as closing stock for the month. What calculation has been done. Please guide me.
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Closing stock calculation
Replies (6)
He must have calculated Gross Profit by applying ratio of GP/Sales. And later he would have calculated Closing Stock by following formula :
Closing Stock = Op. Stock + Purchases + GP - Sales
In your case, he has considered GP as 15% of Sales and made working accordingly to calculate Closing Stock
Thank you very much for your reply. So is it okay if we assume some notional gross profit and calculate the closing stock ?
Either consider GP ratio of last year audited accounts or consider GP ratio prevailing in industry
Thank you sir. You solved my problem. Appreciate.
You are Welcome
whether profit is included in closing stock in manfacturing bussiness like e.g ac bussiness?
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