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Hello,
I managed to figure out the other two questions in this part, but can’t get this one for the life of me. I simply do not get how you got the balancing figures. Could you please explain this to me, so I don’t rip out all my hair.
Thanks,
NeilGo back to your school boy days and let “x” equal the value of the opening inventory.
Take it from there but, if you find that you are still losing your hair, post again
I still can’t seem to get the figures that are in the answers. The thing that is throwing me is not knowing the opening and closing inventories. I get the profit margin etc and try to work my way back up, but without something besides the purchases using both forms I get something completely different.
Its been 20 years since school, so very rusty here.
Let “x” be the value of opening inventory
Therefore closing inventory is “1.3x”
Gross profit is 15% x 450,000 = 67,500
Therefore cost of sales is 382,500
So, “x” + 400,000 purchases – “1.3x” = 382,500
400,000 – 382,500 = .3x
So “x” (opening inventory) is 58,333
Ok?
Wow, so obvious. I guess I just let the frustration get the best of me. For some stupid reason I was using percentages.
Thanks a bunch. I’ll buy you a pint next time you are in London!
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