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Math Help - Accounting question

  1. #1
    Member princess_anna57's Avatar
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    Accounting question

    Please see file attached for question.
    Attached Thumbnails Attached Thumbnails Accounting question-file.jpg  
    Last edited by princess_anna57; October 1st 2009 at 10:37 AM.
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  2. #2
    Member princess_anna57's Avatar
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    So for September the Opening Inventory is 15,642
    Sales budget is 5,413
    A-B = C is 10,229
    Inventory Purchase is 5,413
    Closing inventory is 4,816
    Am I on the right track? And then am I suppose to carry the leftover inventory into the next month? Or am I completely lost?

    And what the heck happens in November? This makes no sense whatsoever.
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  3. #3
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    You're correct for the first part of September. The month starts out with 15,642 units; then by selling 5,413 units you are left with 10,229 units (Line C). But by purchasing an additional 5,413 units (D), your ending inventory is 10,229 + 5,413 = 15,642.

    Note that this just makes sense: If you purchase exactly as many as you sell during a given month, you'll end the month with the same quantity you started the month with.

    And then, as you're thinking, the ending September inventory becomes the beginning inventory for October.

    Now for November, you'll have to purchase enough units to bring your end-of-November inventory count up to 24,063. In December you need only purchase enough units so that you have 15,642 on hand at the close of December.
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