It average inventory is Rs. 11,25,000 and closing inventory is Rs. 1,00,000 less than opening inventory, then the value of closing inventory will be ___________.

Correct option is B

We are given:

• Average Inventory = ₹11,25,000
• Closing Inventory = Opening Inventory - ₹1,00,000

Formula for Average Inventory:

$$AverageInventory=(OpeningInventory+ClosingInventory)/2Average\; Inventory=\; (Opening\; Inventory+Closing\; Inventory)/2AverageInventory=(OpeningInventory+ClosingInventory)/2$$

Let Opening Inventory be X.
So, Closing Inventory = X - 1,00,000

$$11,25,000=(X+(X-1,00,000))/211,25,000=(X+(X-1,00,000))/211,25,000=(X+(X-1,00,000))/2$$

$$11,25,000=(2X-1,00,000)/211,25,000=(2X-1,00,000\; )/211,25,000=(2X-1,00,000)/2$$

2×11,25,000=2X−1,00,000

22,50,000+1,00,000=2X

2X=23,50,000

X=11,75,000

So, Closing Inventory = X - 1,00,000 = 11,75,000 - 1,00,000 = 10,75,000

Correct Answer:

(b) 10,75,000

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