# MR.prem commenced business of trading in electonic goods with an initial capital of 15,00,000 . Out of the said Rs. 15,00,000 he paid Rs. 10,00,000 towards purchase of Electronic goods, he further spent Rs. 2,00,000 on furnishing the shop andRs. 35,000 for purchase of computer printer,Rs.10,000 is yet to be paid to the supplier of computer.He sold goods costing Rs. 5,00,000 for Rs . 7,00,000 in cash. and goods costing Rs. 2,50,000 for Rs. 3,10,000 on credit. Goods sold on credit for Rs. 25000 were returned being defective. These goods (costing Rs.20,000) were returned to the supplier.looking into the response he decided to trade in Home appliances also and further invested Rs.5,00,000He purchased Electronic goods and Home appliances for Rs. 8,00,000 out of which purchases of Rs.2,00,000 were on credit.Due to Earthquake two LCD TV. costing Rs. 50,000 were compleately distroyed. Mr. Prem received an Insurance claim of Rs. 30,000A customer purcahsed goods costing Rs. 2,25,000 for Rs. 3,00,000 and was allowed discount of Rs. 15,000 he was further allowed discount of Rs. 5,000 for payment within agreed time.He paid salary to Mr. Shyam, Rs. 55,000 , Rs. 5000 yet to be paid .He insured the goods and paid insurance premium of Rs. 10,000 out of this Rs. 5,000 are for the next year.Prem withdrew Rs. 30,000 during the year for personal use.kindly give me the workings to find out the following.What is the value of closing stock,what is the value of cost of goods soldWhat is the value of the total Expenses incured by Mr. prem during the year.

Hi Nandana, the solution to your query is as follows.
In response to the first part of your query, value of Closing Stock is calculated is as follows.

Closing Stock = Opening Stock + Purchases (Net) - Sales (Net)

= 0 + 17,30,000 (10,00,000 + 8,00,000 - 20,000 - 50,000) - 12,70,000 (7,00,000 + 3,10,000 + 2,85,000 -                            25,000)

= Rs 4,60,000
In response to the second part of your query, Cost of Goods Sold is ascertained as follows.
Cost of Goods Sold = Opening Stock + Purchases + Direct Expenses - Closing Stock
=0 + 17,30,000 + 0 - 4,60,000
= Rs 12,70,000
In response  to the last part of your query, Total Expenses (as per the Cash Basis of Accounting) incurred by Mr. Prem during the year are calculated as follows.

Total Expenses = Net Purchases + Furnishing of Shop + Purchase of Computer Printer + Salary + Insurance Premium                               + Drawings + Loss of Goods due to earthquake + Discount Allowed
= 17,30,000 (10,00,000 + 8,00,000 - 20,000 - 50,000) + 2,00,000 + 45,000 (35,000 + 10,000) + 60,000                              (55,000 + 5,000) + 10,000 (5,000 + 5,000) + 30,000 + 20,000 (50,000 - 30,000)+ 20,000 (15,000 +                                 5,000)
= Rs 21,15,000

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