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22 September, 02:15

Soriano Company had net sales of $300,000 for the month (after returns and allowances of $1,500 and sales discounts of $3,250). Beginning inventory for the month was $60,000; purchases for the month were $175,000; and gross profit was 43%. What was the ending inventory for the month?

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  1. 22 September, 03:19
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    Ending Inventory $ 64,000

    Explanation:

    To define the final inventory of the company it's necessary to find the cost of good of the period.

    As the company had a 43% of gross profit, it means that for every dollar of sales we have 0,43 dollar of Gross Profit, with this value is possible to know the total cost of the goods sold during the period, that it's the difference between Sales Revenue and Gross Profit.

    Total Sales Revenue had to be the net value after returns and discounts as it's detailed.

    Income Statement

    Sales revenue $ 300,000

    Cost of goods sold - $ 171,000

    Gross Profit $ 129,000 43%

    Beginning Inventory $ 60,000

    Purchases $ 175,000

    Cost of goods sold - $ 171,000

    Ending Inventory $ 64,000
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