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+---- Thread: Principles of Accounting: Inventory Question (/Thread-Principles-of-Accounting-Inventory-Question--1929)
Principles of Accounting: Inventory Question - mstcrow5429 - 06-27-2007
In the official study guide, question 40 is as follows:
Net purchases for the year amounted to $80,000. The merchandise inventory at the beginning of the year was $19,000. On sales of $120,000, a 30 percent gross profit on the selling price was realized. The inventory at the end of the year was ($15,000)
I don't know how or why it's $15,000.
Principles of Accounting: Inventory Question - Kiwi Lover - 06-27-2007
mstcrow5429 Wrote:In the official study guide, question 40 is as follows:
Net purchases for the year amounted to $80,000. The merchandise inventory at the beginning of the year was $19,000. On sales of $120,000, a 30 percent gross profit on the selling price was realized. The inventory at the end of the year was ($15,000)
I don't know how or why it's $15,000.
Beginning inventory $ 19,000
Purchases made during year $ 80,000
TOTAL INVENTORY $ 99,000
Sales $120,000
Profit amount (30% of $120K) - 36,000
INVENTORY SOLD $ 84,000
TOTAL INVENTORY $ 99,000
Inventory amount sold - 84,000
INVENTORY ON HAND $ 15,000
Principles of Accounting: Inventory Question - mstcrow5429 - 06-27-2007
K, thanks, I understand now. Tripped up on the 30 percent gross profit on the selling price part.