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  • 1.  inventory help

    Posted 06-01-2022 10:20 AM
    The following information is available for an entity for the quarter ended March 31, of the current year:

    Merchandise inventory, as of January 1 of the current year
    $  30,000
    Sales
    200,000
    Purchases
    190,000
    The gross profit margin is normally 20% of sales. What is the estimated cost of the merchandise inventory at March 31, of the current year?
    Answer (B) is correct.
    Using the gross profit method, cost of goods sold for the quarter is estimated to be $160,000 [$200,000 sales × (1.0 – 0.2)]. Goods available for sale was $220,000 ($30,000 beginning inventory + $190,000 purchases). Estimated ending inventory is therefore $60,000 ($220,000 goods available for sale – $160,000 estimated cost of goods sold).



    ------------------------------
    Tayba Al-Mehdar
    Controller
    Khobar
    Saudi Arabia
    ------------------------------


  • 2.  RE: inventory help

    Posted 06-02-2022 01:55 AM
    Beginning Inventory -                 $30,000
    Purchases                                   $190,000



    Less :   (200,000 x 80%              $160,000  (The gross profit margin is normally 20% of sales.)

    Closing Stock                              $60,000





    ------------------------------
    Siby Mathew
    Accountant
    ------------------------------



  • 3.  RE: inventory help

    Posted 06-02-2022 03:38 AM
    Hello Tayba,

    Beginning Inventory + Purchases = Ending Invenory+ Cost of goods sold

    Gross margin is 20%, so Cost of goods sold equals 80% of sales (200,000 * 80%)=160,000
    Beginning Inventory for the quarter is 30,000$
    Purchases for the Quarter is 190,000$
    Now you can replace those amounts in the equation to get the Ending Inventory as of 31 March
    Ending Inventory as of 31 March=30,000+190,000-160,000
    =60,000$





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