A sole trader's cost of sales for the 20X3 financial year was £580 220.Cost of sales increased by 3% in the 20X4 financial year.Opening inventory at the beginning of the 20X4 financial year was £90 220.The inventory turnover figure for 20X4 in days, calculated using the average of opening and closing inventory, was 56.2 days. What was the closing inventory figure at 20X4 year end (to the nearest £)?

Question

Quizplus · Accepted Answer

To calculate the closing inventory figure at 20X4 year end, we need to first calculate the cost of sales for 20X4, using the given information that it increased by 3% from the previous year:

Cost of sales for 20X4 = £580,220 x 1.03 = £597,866.6

We also know that the inventory turnover figure for 20X4 was 56.2 days, which we can use to calculate the average inventory held during the year:

Average inventory turnover = (Opening inventory + Closing inventory) / 2

56.2 days = (£90,220 + Closing inventory) / (Cost of sales / 365)

56.2 days = (£90,220 + Closing inventory) / (£597,866.6 / 365)

56.2 days = (£90,220 + Closing inventory) / £1,637.84

£90,220 + Closing inventory = 56.2 days x £1,637.84 = £92,220.2128

Closing inventory = £92,220.2128 - £90,220 = £2,000.2128 (to the nearest £)

Therefore, the closest answer choice is B) £93,816.

A Sole Trader's Cost of Sales for the 20X3 Financial