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ekettne
Jul 30, 2009, 12:25 AM
How do you find the net sales revenue when the only information you have is the beginning inventory, ending inventory, net purchases for the year, and the company's normal gross profit precent?

morgaine300
Jul 30, 2009, 01:54 AM
For periodic inventory method:
Beginning Inventory
+ Net Purchases
= Total Available for Sale
- Ending Inventory
= Cost of Goods Sold

Basically, if you take what you started with and add what you purchased, that gives you everything you had to sell during the period. Out of that availability, you either sold it or you still have it. So if you subtract out what you have left, the difference must be what you sold. (At cost.)

Sales
-Cost of Goods Sold
=Gross Profit

Sales is 100%. If you have a portion of that (say gross profit is 55%), and you're trying to get back to that 100% number, divide by the percentage.