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hi sir
His rival down the road achieves a gross margin of 15%. His closing inventory was 30% higher than the opening inventory. Sales in the year were $450,000 and purchases were $400,000.
What was the opening inventory?
how to get cl inv figure?
thank you sir
Op inv + purchases – cl inv = cost of sales
x + 400k – 0.3x = 382.5k
x – 0.3x = 17.5k
x = 17.5/0.3
= 58.333k
cl inv =58333 x 1.3
= 75833Correct? I think something wrong with my calculation
No, closing inventory is 30% higher than opening inventory
So closing inventory must be 1.3x
Go from there
1x + 400k – 1.3x = 382.5k
1x – 1.3x = 400k – 382.5k
1x – 1.3x = 17.5k
0.3x = 17.5k
x = 17.5÷0.3
=58.333k
Is ok?
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