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revenue $560,000, Mark-up 33.33%, closing inventory 80,000, an increase of 1005% COMPARED WITH opening invent.
payables b/f 79,000
c/f 160,000
receivables b/f 62,000
c/f 59,500bad debt written off 3,500
allowance for receivables b/f 8,620
c/f 15,200how much cash was paid to the suppliers?payables in the year?
answer 379,000
could you please show me how to get the answer? many thanks!
Just confirm the percentage increase of closing inventory over opening inventory. I can’t believe that it’s 1005%!
I assume that it’s a 100% increase on the value of the opening inventory so opening inventory must be 40,000
Cost of sales is the combination of opening inventory + purchases – closing inventory
Cost of sales itself is 75% of revenue (sales are made at a mark-up of 33.33%, so profit is 25% of revenue)
Profit is therefore 25% of 560,000 = 140,000 so cost of sales is 420,000
40,000 + purchases – 80,000 = 420,000 so purchases must equal 460,000
Opening suppliers’ balance was 79,000
Purchases was 460,000 and
Closing suppliers’ balance was 160,00079,000 + 460,000 – 160,000 = cash paid
Ok?
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