Delta Merchandising, Inc. has provided the following information for the year just ended: $$\begin{array} { | l | r | }
\hline \text { Net sales } & \$ 128,500 \
\hline \text { Beginning inventory } & 24,000 \
\hline \text { Purchases } & 80,000 \
\hline \text { Gross margin } & 38,550 \
\hline
\end{array}$$ The ending inventory for the company at year end was:
A)$9,950.
B)$24,500.
C)$65,450.
D)$14,050.

Question

Delta Merchandising, Inc. has provided the following information for the year just ended: $$\begin{array} { | l | r | } 
\hline \text { Net sales } & \$ 128,500 \
\hline \text { Beginning inventory } & 24,000 \
\hline \text { Purchases } & 80,000 \
\hline \text { Gross margin } & 38,550 \
\hline
\end{array}$$ The ending inventory for the company at year end was:
A)$9,950.
B)$24,500.
C)$65,450.
D)$14,050.

Quizplus · Accepted Answer

The cost of goods sold (COGS) can be calculated as: Beginning Inventory + Purchases - Ending Inventory = COGS. Given the Gross Margin formula is: Net Sales - COGS = Gross Margin, we rearrange to find COGS = Net Sales - Gross Margin = $128,500 - $38,550 = $89,950. Plugging back into the COGS formula: $24,000 + $80,000 - Ending Inventory = $89,950. Solving for Ending Inventory gives: $104,000 - $89,950 = $14,050.

Delta Merchandising, Inc The Ending Inventory for the Company at Year End Was