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Principles of Accounting: Inventory Question
#1
In the official study guide, question 40 is as follows:

Net purchases for the year amounted to $80,000. The merchandise inventory at the beginning of the year was $19,000. On sales of $120,000, a 30 percent gross profit on the selling price was realized. The inventory at the end of the year was ($15,000)

I don't know how or why it's $15,000.
Excelsior, BS, pursuing degree

Completed:
CLEP: Hum. (67), Hist. of U.S. I (74), Hist. of U.S. II (71), Intro. Psych. (69), Intro. Soc. (72), Soc. Sci. and Hist. (74), Western Civ I (72), Western Civ II (70), Am. Lit. (60), Intro. to Educ. Psych. (62), P. of Management (74), P. of Market. (74), Intro. Bus. Law (67), P. of Accounting (60), AmGov (68)
DSST: Ethics in Am. (76), P. of Super.(67), HRM (65), Intro to Bus. (70), MIS (65), P. of Fin (62), M&B (65), P. of Stat. (68)
ECE: OB (B)
TECEP:: IntFin, SecAna

Others

Total Credits: 129
Reply
#2
mstcrow5429 Wrote:In the official study guide, question 40 is as follows:

Net purchases for the year amounted to $80,000. The merchandise inventory at the beginning of the year was $19,000. On sales of $120,000, a 30 percent gross profit on the selling price was realized. The inventory at the end of the year was ($15,000)

I don't know how or why it's $15,000.


Beginning inventory $ 19,000
Purchases made during year $ 80,000
TOTAL INVENTORY $ 99,000

Sales $120,000
Profit amount (30% of $120K) - 36,000
INVENTORY SOLD $ 84,000

TOTAL INVENTORY $ 99,000
Inventory amount sold - 84,000
INVENTORY ON HAND $ 15,000
BS - General Business - June 2007
Excelsior College
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#3
K, thanks, I understand now. Tripped up on the 30 percent gross profit on the selling price part.
Excelsior, BS, pursuing degree

Completed:
CLEP: Hum. (67), Hist. of U.S. I (74), Hist. of U.S. II (71), Intro. Psych. (69), Intro. Soc. (72), Soc. Sci. and Hist. (74), Western Civ I (72), Western Civ II (70), Am. Lit. (60), Intro. to Educ. Psych. (62), P. of Management (74), P. of Market. (74), Intro. Bus. Law (67), P. of Accounting (60), AmGov (68)
DSST: Ethics in Am. (76), P. of Super.(67), HRM (65), Intro to Bus. (70), MIS (65), P. of Fin (62), M&B (65), P. of Stat. (68)
ECE: OB (B)
TECEP:: IntFin, SecAna

Others

Total Credits: 129
Reply


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