[wdwj06]

Here's my situation. I need to know how the ending inventory is calculated on these numbers"

Beginning inventory = 20776
purchases of goods in 2008 = 156611
Other expenses in 2008 = 67803
Sales in 2008 = 215940

Your help appreciated.

[ROLCAM]

You can approximately do it by having the
statistics to help you.
The statistic you need is the average GROSS MARGIN of your business over a few previous years.

The better way of course is to take a physical count and costing the inventory.

The assumption is that the gross margin of your business over the last previous five years was 40%.

You can now work backwards from the figures given to get the CLOSING INVENTORY.

A) Beginning inventory = 20776
B) purchases of goods in 2008 = 156611
C) Other expenses in 2008 = 67803
D) Sales in 2008 = 215940

1) The other expenses is no help at all
although it gives you some gauge as to whether it can be covered by the gross margin.

2) 40% of 215,940 = 86,376 GROSS MARGIN

3) Trading Account:-

D) Sales in 2008********** = 215,940
****************=====
A) Beginning inventory****** = 20,776
ADD.
B)purchases of goods in 2008 = 156,611
__________________________________
SUB-TOTAL****************= 177,387
LESS
X) Closing inventory *********= 47,823
___________________________________
Y) Cost of goods sold ********= 129,564

Z) GROSS MARGIN ********=86,376.
___________________________________

Based on the assumption the Closing Inventory would have been $47,823.