Help needed..

Can u explain question in detail.. as u r saying that the increase in prices are for 2012??? if we it is 2002 prices increase..there might be some other adjustment.. if u can give us full question we might solve..as we have give only half year purchase and sales..

i am sorry for the typing mistake, the year is 2002 and not 2012.

ive corrected it ... other than that there are no errors or missing details in the question. (one may refer tulsian's accountancy (group 1) - pg. 13.6)   

is the question to arrive at GP of 2002 based on information provided? or is it to arraive at GP margin of 2002?

What is the exact question.

as mentioned above, the question is to find the closing stock...

this is how it has been solved in the book :

my problem is that i am not able to figure out why gp = 222000 (30% of sales is 264000)

I hope the solution provided to u might be wrong becoz..with given sale amount the % of gp provided will not be correct.. so i think 264000 which we arrived is the correct answer..

Its a good question.

Lets first understand what the question is telling us to do based on the infromation provided.

1. It says that assume a particular price for 2001, the GP is 240,000. If the prices of purchase and sale increase by 20% and 10% respectively, what will be the closing stock.

2. Though it mentions GP for 2001 but not sure if it applies for 2002. Refer point 5 for logic.

3. No where it discloses quantitative information.

4. Thus it is asking us that if the basis of operation is same ie same qty is bought and sold, then what is the value of clsoingh stock.

5. Thus if quantity is a constant in the case, purhcase price and slae price escalation is given, it entails that the GP is not constant.

Logic behind the solution in given example of text book:

1. Assume purhcase price to be 100, and the goods in opening stock to be hundred. Now prepare a trading account of only quantities for 2011.

2. This Qty P&L will remain same because the basis is constant. Thus same amount of qty in op stk, purhcase, sales and closing stk.

3. Arrrive at a Selling price for 2001. It will be 142.86. Considering the increase in 2002 of 10%, it will be 157.14.

4. Now plot the information and you will arrive at the closing stock as balancing number.

Hope this helps.

3. Arrrive at a Selling price for 2001. It will be 142.86. Considering the increase in 2002 of 10%, it will be 157.14. can u plz explain this point how did u arrive this one.??