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Ajay’s annual inventory count took place on 7 july 20X6. The inventory value on this date was $38, 950. During the period from 30 june 20X6 to 7 july 20X6 following took place:
Sales: $6,500
Purchases: $4, 250
The mark up is 25% on cost
What is Ajay’s inventory value at 30 june 20X6?There is no point in typing out a full question and expecting to be provided with a full answer. You must have an answer in the same book in which you found the question, so ask about whatever it is in the answer that you are not clear about and then I will explain.
You need to work backwards from 7 July in order to calculate what the inventory was on 30 June, adjusting for what happened during the period.
During the period that had bought more goods for 4,250 and so the inventory at 30 June would be lower than the inventory at 7 July.
In addition they had sold goods for 6,500 and so the inventory at 30 June will be higher than it was on 7 July by the cost of the goods that were sold (and you can calculate what the cost of the goods sold was because you know the mark-up).Thank you so much for your reply and extremely sorry for typing the full question, actually I wasn’t able to understand the whole question itself as to what to do and the answer in the back was totally useless in explaining.
I got it now that as you said to know the inventory on June 30 (opening Inventory) we have to work backwards.
Thank you so much for your help. Your amazing! <33
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