Question

Using the following figures, determine closing book inventory

(not all information given may be needed):
a. Opening inventory
$89,760
b. Gross purchases $43,620
c. RTV $860 Cash discounts $320
d. Markdowns $5,246

Answer 1

To calculate the closing book inventory, start with the opening inventory and adjust for net purchases (gross purchases minus returns and discounts) and markdowns. The closing book inventory is calculated to be $126,954.

Step-by-step explanation:

The student is asking how to determine the closing book inventory given certain financial information. To calculate the closing book inventory, we should start with the opening inventory amount and adjust it by the net purchases (gross purchases minus returns and cash discounts) and markdowns.

• Opening inventory: $89,760
• Gross purchases: $43,620
• Returns to vendor (RTV): -$860
• Cash discounts: -$320
• Markdowns: -$5,246

First, we'll subtract RTV and cash discounts from gross purchases to find the net purchases:

$43,620 - $860 - $320 = $42,440

Next, we'll add the net purchases to the opening inventory and then subtract markdowns:

$89,760 + $42,440 - $5,246 = $126,954

The closing book inventory is $126,954.