Question : Rs.2,00,000 is the cost of revenue from operations, Inventory turnover 8 times; Inventory at the beginning is only 1.5 times than the Inventory at the end. The values of Opening inventory is
Option 1: Rs. 25,000
Option 2: Rs. 30,000
Option 3: Rs. 45,000
Option 4: Rs. 27,000
Correct Answer: Rs. 30,000
Solution : Answer = Rs 30000
Cost of revenue from operation = 2,00,000; Net closing inventory = $\ x$; Opening inventory= $\ 1.5x$
Inventory Turnover Ratio = $\frac{\text{Cost of revenue from operation}}{\text{Average Inventory}}$
8 times = $\frac{\text{2,00,000}}{\text{Average Inventory}}$
Average Inventory = 2,00,000/8
= 25000
$\begin{aligned}
& \text { Average Inventory }=\frac{1.5 x+x}{2} \\
& 25000=\frac{2.5 x}{2}
\end{aligned}$
$2.5x = 50,000$
$x=\frac{50,000}{2.5}=20,000$
Closing Inventory = Rs 20,000
Op. inventory = $1.5\times20,000$ = 30,000
Hence, the correct option is 2.
