At the beginning of 2010, England Dresses has an inventory of $140,000. However, management wants to reduce the amount of inventory on hand to $80,000 at December 31. If net sales for 2010 are forecast at $400,000 and the gross profit rate is expected to be 40%, compute the cost of the merchandise which management should expect to purchase during 2010. (Hint: First compute the expected cost of goods sold.)
A) $240,000.
B) $180,000.
C) $320,000.
D) $220,000.

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The Answer of At the beginning of 2010, England Dresses has an inventory of $140,000. However, management wants to reduce the amount of inventory on hand to $80,000 at December 31. If net sales for 2010 are forecast at $400,000 and the gross profit rate is expected to be 40%, compute the cost of the merchandise which management should expect to purchase during 2010. (Hint: First compute the expected cost of goods sold.)
A) $240,000.
B) $180,000.
C) $320,000.
D) $220,000.

At the Beginning of 2010, England Dresses Has an Inventory