From the following balances extracted from the books of M/s Ahuja and Nanda. Calculate the amount of: (a) Cost of goods available for sale (b) Cost of goods sold during the year (c) Gross Profit Balances: Opening stock ₹25,000; Credit purchases ₹7,50,000; Cash purchases ₹3,00,000; Credit sales ₹12,00,000; Cash sales ₹4,00,000; Wages ₹1,00,000; Salaries ₹1,40,000; Closing stock ₹30,000; Sales return ₹50,000; Purchases return ₹10,000.
Explanation
To solve this, we first determine Net Purchases by combining credit and cash purchases and subtracting returns. Direct expenses like wages are added to opening stock and net purchases to find the cost of goods available for sale. Subtracting closing stock gives the Cost of Goods Sold (COGS). Finally, Gross Profit is calculated by deducting COGS from Net Sales (Total Sales minus Sales Return).