Question

On July 1, the inventory of at Barnett Shoes was $60,000. Because of anticipated back-to-school sales, the owner wants to have an inventory of $105,000 on hand at the beginning of August. Net sales during July are expected to total $70,000, with a gross profit rate of 45%. During July, the company should purchase merchandise costing:

Answer 1

required purchase 83,500

Step-by-step explanation:

The cost of inventory in july sales and our desired ending invenory is the amount we need. the beginning inventory is a portion of this demand already fullfil, we need to purchase for the difference.

cost of inventory sales for July:

70,000 x (1 - 45%) = 38,500

desired ending inventory 105,000

beginning inventory (60,000)

required purchase 83,500