Can you please help me doing this problem?
On January 1, 2007, the merchandise inventory of Colaw, Inc. was $800,000. During 2007 Colaw purchased $1,600,000 of merchandise and recorded sales of $2,000,000. The gross profit rate on these sales was 25%. What is the merchandise inventory of Colaw at December 31, 2007?

Can you please help me doing this problem?
On January 1, 2007, the merchandise inventory of Colaw, Inc. was $800,000. During 2007 Colaw purchased $1,600,000 of merchandise and recorded sales of $2,000,000. The gross profit rate on these sales was 25%. What is the merchandise inventory of Colaw at December 31, 2007?

simple calculations

Opening inventory + purchases - sales = closing inventory

fill in the numbers and let us see your result

800000+1600000-2000000= 400000

800000+1600000-2000000= 400000

Physical sales must be converted at cost of sales equivalent (2000000*.75)

Thank you very much