Delta Merchandising, Inc. has provided the following information for the year just ended: $38,550\begin{array} { | l | r | } \hline \text { Net sales } & \$ 128,500 \\\hline \text { Beginning inventory } & 24,000 \\\hline \text { Purchases } & 80,000 \\\hline \text { Gross margin } & 38,550 \\\hline\end{array}$ The ending inventory for the company at year end was:

A) $9,950.
B) $24,500.
C) $65,450.
D) $14,050.

Question

Delta Merchandising, Inc. has provided the following information for the year just ended:

38,550\begin{array} { | l | r | } \hline \text { Net sales } & \$ 128,500 \\\hline \text { Beginning inventory } & 24,000 \\\hline \text { Purchases } & 80,000 \\\hline \text { Gross margin } & 38,550 \\\hline\end{array}

The ending inventory for the company at year end was:

A) $9,950.
B) $24,500.
C) $65,450.
D) $14,050.

prajapati Nidhi · Accepted Answer

Final Answer : D, Explanation :  The cost of goods sold (COGS) can be calculated as: Beginning Inventory + Purchases - Ending Inventory = COGS. Given the Gross Margin formula is: Net Sales - COGS = Gross Margin, we rearrange to find COGS = Net Sales - Gross Margin = $128,500 - $38,550 = $89,950. Plugging back into the COGS formula: $24,000 + $80,000 - Ending Inventory = $89,950. Solving for Ending Inventory gives: $104,000 - $89,950 = $14,050.

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