Kunal Corporation had sales of $60,000 in August; $80,000 in September; $95,000 in October; $115,000 in November and $145,000 in December. Cost of goods sold has consistently been at
65% of sales. Additionally, Kunal had $45,000 worth of merchandise at the start of August and
Plans on having inventory on hand worth 20% of next month's cost of goods sold. If all inventory
Purchases are purchased and paid for in the current month, calculate the amount of inventory
Purchased and paid for in November.

Question

Quizplus · Accepted Answer

To calculate the inventory purchased in November, first determine the cost of goods sold (COGS) for November: $115,000 * 65% = $74,750. Next, calculate the desired ending inventory for November, which is 20% of December's COGS: ($145,000 * 65%) * 20% = $18,850. The beginning inventory for November is 20% of November's COGS: ($115,000 * 65%) * 20% = $14,950. The inventory purchased in November is the COGS for November plus the desired ending inventory minus the beginning inventory: $74,750 + $18,850 - $14,950 = $78,650.

Kunal Corporation Had Sales of $60,000 in August; $80,000 in September;