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?

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Originally Posted by bibi_baudelaire

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?

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simple calculations

Opening inventory + purchases - sales = closing inventory

fill in the numbers and let us see your result

800000+1600000-2000000= 400000

Quote:

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Originally Posted by bibi_baudelaire

800000+1600000-2000000= 400000

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

Thank you very much