What is closing stock?

closing stock = purchases + margin - sales

therefore, closing stock = 100000 + ( 20% on 90000 ) - 90000 = 100000 + 18000 - 90000 = Rs. 28000

sales = 90,000 profit = 20%(sales) = 90,000/5 = 18,000 so cost of goods sold is 72,000 total purchases 1,00,000 so closing stock is 1,00,000 - 72,000 = 28,000

Hi  mahesh the correct answer to this problem is Rs 28000 as posted by Piyush

It is really delightful that a student answered this simple  ques correctly and a CA (Tejas) entered wrong post!!!!

Tejas plz note that profit is 20% of sales AND NOT ON COST.

So if i assume cost to be 100 then profit margin is 25% on cost and/or 20% on sales.

Therefore, if cost 100 sales will be 125 and not 120.

90000*100/125=72000

cl stock=100000-72000= 28000

It was my mistake the answer posted by Piyush and CA Sumit Kansal is correct. This is the reason why I have removed my post.

Closing Stock Will be 28000

cost of goods sold = Sales - gross profit = 90000 - 20% on 90000 = 90000 - 18000 = 72000

Hence, closing stock = 100000 - 72000 = 28000 

Here is the formula to solve those sort of questions

Opening Stock (At Cost)+ Purchases (Obviously At Cost) - Cost of Goods Sold (Sales) = Closing Stock (At Cost) 

You can play with above to get whatever missing figure you need and train your mind to get the figures at Cost

thank u frnds...

90,000 is sales so 90,000/120 x 100 = 75,000 is cost of goods sold .

1,00,000 - 75,000 = 25000 is the actual stock in hand