# 12th | Ts grewal 2021-2022 Question 116 to 120 | ch:4 Accounting Ratios

#### Question 116:

Calculate Gross Profit Ratio from the following data:
Cash Sales are 20% of Total Sales; Credit Sales are
`5,00,000; Purchases are  `4,00,000; Excess of Closing Inventory over Opening Inventory  `25,000.

Credit Sales = 5,00,000
Cash sales = 20% of Total Sales

Let Total Sales be ‘x’
Therefore, Cash Sales = 20% of x
Total Sales = Cash Sales + Credit Sales

x=20/100x+5,00,000

x-20/100x=5,00,000

80/100x=5,00,000

Cost of Goods Sold = Purchases – Excess of Closing Stock over Opening Stock
=
` 4,00,000 –  ` 25,000 =  ` 3,75,000
Gross Profit = Total Sales – Cost of Goods Sold
=
` 6,25,000 – 3,75,000 =  ` 2,50,000

Gross profit ratio= Gross profit / Net Sales ×100

= 2,50,000×100/6,25,000=40%

#### Question 117:

From the following information, calculate Gross Profit Ratio:

 ` ` Credit Sales 5,00,000 Decrease in Inventory 10,000 Purchases 3,00,000 Returns Outward 10,000 Carriage Inwards 10,000 Wages 50,000 Rate of Credit Sale to Cash Sale 4:1

Credit Sale =  ` 5,00,000
Rate of Credit Sale to Cash Sale = 4:1
Cash Sale = 14 × 5,00,000 =
` 1,25,000

Total Sales = Cash Sales + Credit Sales =
` 1,25,000 +  ` 5,00,000 =  ` 6,25,000
Cost of Goods Sold = Purchases – Return Outward + Carriage Inwards + Wages + Decrease in Inventory
=
` 3,00,000 –  ` 10,000 +  ` 10,000 +  ` 50,000 +  ` 10,000
=
` 3,60,000
Gross Profit = Total Sales – Cost of Goods Sold
=
` 6,25,000 –  ` 3,60,000 =  ` 2,65,000

Gross Profit Ratio = Gross Profit / Net Sales × 100 = 2,65,000/6,25,000 × 100 = 42.40%

#### Question 118:

From the following information, calculate Gross Profit Ratio:

 ` ` Revenue from Operations: Cash 2,00,000 Carriage Inwards 8,000 Credit 8,00,000 Salaries 42,000 Purchases: Decrease in Inventory 1,22,000 Cash 40,000 Returns Outwards 20,000 Credit 3,60,000 Wages 20,000

(CBSE 2020 C)

Total Sales= 2,00,000+8,00,000=10,00,000

Gross Profit= Total Sales + Wages- Purchases- Carriage Inwards- Returns Outwards- Decrease in Inventory

Gross Profit= 10,00,000+20,000-4,00,000-8,000-20,000-1,22,000

Gross Profit=4,70,000

Gross Profit Ratio=Gross Profit ×100/ Revenue from Operations

Gross Profit Ratio=4,70,000 ×100/ 10,00,000

Gross Profit Ratio = 47%

#### Opening Inventory `2,00,000, Closing Inventory `1,20,000, Inventory turnover Ratio is 8 times; Selling price 25% above cost. Calculate Gross Profit Ratio

Gross profit ratio = gross profit by revenue from operation ×100

Gross profit ratio = 32,0000/ 16,00,000 × 100= 20%

Average inventory = opening inventory + closing inventory by 2

Average inventory = 2,00,000 + 12,0000/2

Average inventory = 1,60,000

Cost of revenue from operation = average inventory × inventory turnover ratio

Cost of revenue from operation =1,60,000 × 8 = 12,80,000

Gross profit = 25% of 12,80,000 = 3,20,000

Revenue from operations = cost of revenue from operations + gross profit

Revenue from operations = 12,80,000 + 3,20,000 = 16,00,000

#### A trader carries an average Inventory of one `1,00,000. His Inventory turnover Ratio is 8 times; He Sells goods at a profit of 25% of cost. Calculate Gross Profit Ratio

Gross profit ratio = gross profit upon revenue from operations ×100

Gross profit ratio = 2,00,000/1,00,0000 ×100 = 20%

Cost of revenue from operation = average inventory × inventory turnover ratio

Cost of revenue from operation = 1,00,000 × 8 = 8,00,000

Gross profit =  25% of 8,00,000 = 2,00,000

Revenue from operation = cost of revenue from operations + gross profit

Revenue from operation = 8,00,000 +2,00,000 = 10,00,000