Cost of goods sold

nicolasimpson1988

Hi,

I have the following question in a practise assessment,

At the end of the financial year, you have the following information:
Total sales £45000
Total purchases £40000
A mark up of 25% on cost was used though out the year.

Calculate the cost of goods sold and the value of inventory at the end of the financial year.

Can someone help with this please as i seem to be having a mental block.

Thanks

AlisonSwanson

COGS is £45000 divide by 125 multiply by 100 = £36000

Opening Inventory add £40000 less closing inventory = £36000

To calculate the closing inventory figure you will need the opening inventory figure. Is it not given in the question??

nicolasimpson1988

Thanks for your help, no there's nothing else in the question.

AlisonSwanson

Is it a new business with no opening inventory?
What is the model answer?

Multiplicator

thx for that alison - learnt something