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MikeLittle.
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wxylhyljf
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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!
MikeLittle
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Just confirm the percentage increase of closing inventory over opening inventory. I can’t believe that it’s 1005%!
MikeLittle
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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?
wxylhyljf
- Topics: 4
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many thanks!
wxylhyljf
- Topics: 4
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thank you!
MikeLittle
- Topics: 26
- Replies: 22600
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You’re welcome
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