# Calculate a purchase figure for the year?

Cat37
Registered Posts:

**6**
Preparing statements for sole traders & paternerships. Please could someone advise how to come to the following answer from given information.

Sales for year £95,200 all at 60% mark up. Opening inventory £22,560 and closing inventory £18,420. Calculate the purchased figure for the year? The answer is £55,360 but how was that calculated?

Thank you in advance.

Sales for year £95,200 all at 60% mark up. Opening inventory £22,560 and closing inventory £18,420. Calculate the purchased figure for the year? The answer is £55,360 but how was that calculated?

Thank you in advance.

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## Comments

645However, closing stock is less than opening stock, meaning you have purchased less stock than you have sold. 22,560 - 18,420 = 4,140.

59,500 - 4,140 = 55,360

6Sales for year £42,000 opening inventory £4700 and purchase were £30,000. Gross profit margin 33 1/3%. Calculate the closing inventory?

645The only other thing you have to be aware of is that this one uses a margin rather than a mark-up.

A mark-up is calculated from the cost of the goods: a £1 item sold at a mark-up of 50% is sold at 1 + 1x50% = £1.50.

A margin is calculated from the sale price of the goods: so an item sold at £1.50 with a 50% profit margin means the margin = £1.50 x 50% = £0.75, and therefore the cost is £1.50 - £0.75 = £0.75.

The first item has a 33% margin (50p profit from £1.50 sale). The second item has a 100% mark-up (75p cost plus 75p mark-up to get to £1.50 sale).

Does that make sense?

You can now work out the cost of the goods sold by taking the sales and subtracting the 33% margin. Everything else you should be able to slot into place to get to the answer. If you need further help just ask.

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