Gross Margin Computations and Inventory Costs on January 15,20X4, Violet Muir va

ID: 2470532 • Letter: G

Question

Gross Margin Computations and Inventory Costs on January 15,20X4, Violet Muir valued her inventory at cost, $41,000. Her statements are based on the calendar year, so you find it necessary to establish an inventory figure as of January 1, 10X4. You find that from January 2 to January 15, sales were $71, 200; sales returns, $2,300; goods purchased and placed in stock, $54,000; goods removed from stock and returned to suppliers. $1,000; and freight in, $400. Calculate the inventory cost as of January 1, assuming that goods are priccd to provide a 24% gross profit.

Explanation / Answer

Amount

Sales

$71200

Less Returns

$2300

$68900

Cost of Goods Sold

Beginning Inventory

$39964

Purchases

$54000

Purchase returns

$1000

Net Purchases

$53000

Freight in

$400

$53400

Cost of Goods Available for Sale

Inventory , January 15

$41000

Cost of Goods Sold .76 * 68900

$52364

Gross Margin

$16536

Beginning Inventory = $52364+$41000-$53400=$39964