Closing inventory is the amount of inventory that a business still has on hand at the end of a reporting period. The amount of closing stock (properly valued) is used to arrive at the cost of goods sold in a periodic inventory system with the following calculation:
Opening stock + Purchases – Closing stock = Cost of goods sold
Here cost of goods sold = sales – margin = sales – 20% of sales = 2,70,000 – 20% of 2,70,000 = 2,70,000 – 54,000 = Rs. 2,16,000
Thus closing inventory = purchases – cost of goods sold = 3,00,000 – 2,16,000 = Rs. 84,000.

When a new partner is admitted in the firm, the existing/old partners have to sacrifice, what is given to the new partner, from their future profits, the reputation they have gained in their past efforts and the side of capital they have taken before. The new partner when admitted, has to compensate for all these sacrifices made by the old ones. The compensation for such sacrifice can be termed as ‘goodwill’.
Hence, at the time of admission of the new partner, it is necessary to account the valuation of goodwill in the firm.
Here Mohan’s share in profit is 1/5th
the combined capital of Ramesh and Suresh = 1,02,900 + 73,500 = 1,76,400.
This combined capital constitutes 4/5 th of the total capital
So total capital of the firm will be = 1,76,400 × 5/4 = Rs. 2,20,500
Thus C’s capital will be = 2,20,500/5 = Rs. 44,100.

Owner’s capital refers to the sum of the business resources owned by the business owners. It is calculated through the subtraction of assets from liabilities. When a business pays all its debts, the amount remaining belongs to the business owner and it is the one that is referred to as Owners Capital or Owners Equity.
Formulas of closing capital:
Closing capital =
Opening capital + profit OR
Opening capital + profit + additional capital –drawings – interest on drawings
Profit = closing capital – opening capital – additional capital + drawings = 16,430 – 12,000 – 4,000 + 3,000 = Rs. 3,430

A joint venture (JV) is a business agreement in which the parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets.
Profit on venture can be ascertained with the help of the joint venture account. Goods bought on joint venture as well as expenses incurred in connection with the business are debited to the joint venture account and credited to the coventurer’s account or the joint bank account. When the goods are sold, the amount thereof is debited to the coventurer’s account or the joint bank account and credited to the joint venture account. If the parties have taken over plant or materials etc., the value will be debited to the account of the party concerned and credited to the joint venture account. The joint venture account will now show profit or loss which will be transferred to the personal accounts of the
respective parties in their profit sharing ratio.

Goods returned to supplier will decrease balance in supplier’s a/c and will decrease purchases (add profit).

Loss of quantity of goods in the normal course of business and inherent and thus inevitable or unavoidable,such as loss because of loading and unloading of goods, leakage, evaporation or shrinkage is known as normal loss.

The treatment of normal loss is to charge it to consignment account. The total cost of goods sent is charged to the units remaining. Value of inventory is inflated to cover the normal loss. In other words such loss is absorbed by the remaining units.

No separate entry is made in the books of consignor in case of normal. such loss is considered while calculating the cost of inventory left unsold with the consignee. The value of unsold stock on consignment is increased because the value of stock is the proportion of the cost of the goods consigned and direct expenses that the quantity of inventory bears to the total quantity of goods consigned as diminished by the normal loss of goods.

Here PARIKH & CO. of Nagpur consigned D of Delhi 1,000 Kgs. of Oil @ Rs. 13 per Kg.
Consignor spent Rs. 750 on cartage, Insurance and freight. On the way due to leakage
50 kg. of oil was spoiled (Normal loss) D spent Rs. 500 on Octroi and carriage. His selling expenses
were Rs. 400 on 800 kg. of oil sold.
Units lost = 50 kgs
Closing inventory = 1,000 – 50 – 800 = 150 kgs
Cost of goods consigned = 13,000 + 750 + 500 = Rs. 14,250
Value of closing inventory = units of unsold inventory × (original cost of goods consigned + direct expenses)/
(total units – units lost) = 150 × 14,250/950 = 2,250Rs.