Question

Robertson Corporation's inventory balance was $22,000 at the beginning of the year and $20,000 at the end. The inventory turnover ratio for the year was 6.0 and the gross profit ratio 40%. What were net sales for the year

Answer 1

Answer:

$176,400

Explanation:

Step 1 : Cost of Sales calculation

inventory turnover ratio = Cost of sales ÷ average inventory

therefore,

Cost of sales = inventory turnover ratio x average inventory

                       = $126,000

Step 2 : Sales calculation

we know that :

Sales = Cost + Profit

140 % = 100 % + 40 %

therefore,

Sales = 140% / 100% x $126,000

          = $176,400

thus,

net sales for the year is $176,400