Bousee Corporation had sales of $45,000 in January; $70,000 in February; $85,000 in March; $105,000 in April and $120,000 in May. Cost of goods sold has consistently been at 75% of sales.
Additionally, Fulton had no inventory at the start of January and plans on having inventory on hand
Worth 15% of next month's cost of goods sold. Half of inventory purchases are paid for in the current
Month, and the remaining amount in the next month. Given this information, calculate the amount of
Inventory paid for in January.

Question

Quizplus · Accepted Answer

In January, the cost of goods sold is 75% of $45,000, which is $33,750. The desired ending inventory for January is 15% of February's cost of goods sold (75% of $70,000), which is $7,875. Therefore, the total inventory needed in January is $33,750 + $7,875 = $41,625. Since half of the inventory purchases are paid in the current month, the amount paid in January is $41,625 / 2 = $20,813.

Bousee Corporation Had Sales of $45,000 in January; $70,000 in February;