Merchandise inv was 1400000. purchases were 2800000. sales were 3500000. gross profit on sales were 25%. what is the ending inventory?
2007-01-29 02:02:57 · 7 answers · asked by KC_Meag42 5 in Education & Reference ➔ Homework Help
Here's how ending inventory is calculated.
Beginning inventory +purchases-Cost of Goods Sold=Ending Inventory. You are given two of these numbers and have to calculate the third. To calculate COGS, you take sales of 3,500,000 *75%. This gives you 2,625,000. So, your answer will be 1,400,000+2,800,000-2,625,000= 1,575,000
2007-01-29 02:10:39 · answer #1 · answered by theeconomicsguy 5 · 0⤊ 0⤋
You can get the answer in an equation format and also in a T-account format. First, the equation format:
Opening Inv+Purchases+Gross Profit = Sales+Closing Inv
Now, juxtapose and find for closing inventory:
Op Inv+Pur+G.P. - Sales = Ending inventory
Rs lacs (14+28+8.75-35) = 15.75
The same answer now in the T-account format:
Op Inv 1400000 Sales 3500000
Purchases 2800000 End Inv 1575000
G.P (25%of
3500000) 875000
------------ -------------
5075000 5075000
------------- -------------
Please note that the ending inventory is the balancing amount in the account format. In the equation format, it is the unknown value to be determined.
2007-01-29 10:28:22 · answer #2 · answered by braj k 3 · 0⤊ 0⤋
The equation is simple, it's beginning inventory plus purchases minus sales. They give you the first two, but you have to figure out how much inventory was sold.
They do not give you the cost of inventory sold but they give you a way to solve it. You can get it by solving the gross profit which is 25% of gross sales. 25% of $3.5MM is $875,000. Since you now know what gross profit is, you can solve the cost of sales, $3,500,000 minus X = $875,000. So, X = $2,625,000.
Once you have the cost of goods sold you can now solve the problem.
Beginning inv + purchases - COGS = Ending inv.
$1,400,000 + $2,800,000 - $2,625,000 = $1,575,000
2007-01-29 10:17:42 · answer #3 · answered by Dean 3 · 1⤊ 0⤋
I'm pretty sure it's 1,575,000, but it has been a while since I've done this. You times sales by the gross profit, and then minus that answer from sales, then you add all three together. I was an accounting major in college for the first two years.
2007-01-29 10:10:47 · answer #4 · answered by krazy_chic6944 3 · 0⤊ 0⤋
gross profit*75%=cost of goods sold
Beginning Inv.+purchases-cost of goods sold=ending inventory
2007-01-29 10:15:30 · answer #5 · answered by swksmason 3 · 0⤊ 0⤋
Add the three together then divide the total by 25%
2007-01-29 10:10:27 · answer #6 · answered by rainwater 3 · 0⤊ 1⤋
350,000/25% minus 14,000.
2007-01-29 10:12:34 · answer #7 · answered by Anonymous · 0⤊ 1⤋