Question b- 1

Illustration 7: The financial year of Mr. Ratan Lal & Co. ends on 30th June 2006, but the actual stock is physically only on 7th July, 2006, when it is estimated at Rs. 20,000. Additional information: 1. Purchases between 30th June and July are Rs. 2000. 25 2. Purchases returns between 30th June and 7th July are Rs. 200. 3. Sales between 30th June and 7th July are Rs. 4000. 4. Sales returns between 30th June and 7th July are Rs. 100. 5. The firm makes a gross profit at 25% on cost.(1) Cardamom has taken goods valued Rs. 800 for his personal use without making entry in the books. (2) Purchases of the year included Rs. 400 spent on acquisition of a ceiling fan for his shop. (3) Invoices for goods amounting to Rs.2600 have been entered on 29th December, but such goods were not included in stock. (4) Rs. 350 have been included in closing stock in respect of goods purchased and invoiced on 28th December, 2005 but included in purchases for January 2006. (5) Sale of goods amounting to Rs. 405 sold and delivered in December, 2005 had been entered in January, 2006 sales. You are required to ascertain the correct amount of closing stock as on 31st December, 2005 and the adjusted net prot for the year ended on that date