Desired ending inventory is 20% of next month's sales. If cost of goods sold is $300,000 and next month's sales are $900,000, which of the following statements is true regarding purchases?

Question

Quizplus · Accepted Answer

The information given only tells us the cost of goods sold and the desired ending inventory, but it does not provide any information about the beginning inventory or the amount of purchases needed to meet next month's sales. Therefore, we cannot predict the amount of purchases needed and choice B is the best answer.

Desired Ending Inventory Is 20% of Next Month's Sales