Hi,
sir I am unable to get question no 2 of cost of sales. How do we get the opening inventory. I am clear with how we get profit, but i am not getting how do you calculate Opening inventory. As opening inventory will lead to the answer of closing inventory too. so I am unable to calculate closing as well.
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Mini exercises
10y ago#1Hint - use algebra!
Let opening inventory be "x" .... and then go from there
Sir I was no linked to algebra or maths for a long time so I am not able to do this solution. ? so please can you do that for me. So that I can do other solutions too with the help of that!
10y ago#3If you can arrive at the profit, then you can also arrive at cost of sales (revenue - profit) $382,500
and you surely remember that cost of sales comprises the calculation "opening inventory + purchases - closing inventory"
and we know that purchases is $400,000
and I've already told you to let opening inventory be "x"
so now we have "x + 400,000 - 1.3x = 382,500"
and from that we can arrive at .3x = 17,500
so x must equal 58,333
and 1.3x must equal 75,833
Now put those values into a trading account just to make sure that opening inventory + purchases - closing inventory does in fact arrive at 382,500
OK?
Oh thank you so much! :)
10y ago#5You're welcome, though it's hardly rocket science - you should have been able to do this for yourself!
I was trying that in the same way but i was doing mistake in 1.3x part actually.
10y ago#7Hope that it's clear now, then :-)
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