Basic Accounting question

starface

Hi,

This is just an accounting question I'm preparing. It's basic enough but I just can not understand how to go about calculation the monthly opening stock, purchases and closing sock figures from the details giving. I know how to complete the rest of it but this bit has thrown me. I'm just sick of looking at it now so maybe a fresh pair of eyes would do the job.

I get that the gross margin is 40% of sales.

Am I right in saying the her opening stock is going to be the giving month plus half of the following month?

Thanks

barneystinson

starface wrote: »

Hi,

This is just an accounting question I'm preparing. It's basic enough but I just can not understand how to go about calculation the monthly opening stock, purchases and closing sock figures from the details giving. I know how to complete the rest of it but this bit has thrown me. I'm just sick of looking at it now so maybe a fresh pair of eyes would do the job.

I get that the gross margin is 40% of sales.

Am I right in saying the her opening stock is going to be the giving month plus half of the following month?

Thanks

Yeah, like you need to net back the monthly sales figures so cost of purchases for each month is November 12k, December 36k, etc...

So the purchases (assuming by 6 weeks they actually mean a month and a half!) then your October purchases for opening stock on 1 November will be 12k plus 18k {0.5 x 36k} giving you opening stock of 30k.

In November you will need to buy the stock in for the second half of December i.e. another 18k, Plus the first half of January 24k (80k x 60% x 0.5), total of 42k.

In December you budget for the second half of January 24k, plus first half of February 27k (90k x 60% x 0.5) total of 51k.

And so on...

Makes sense?

starface

Ahw! Yes it makes sense. Thanks. I was just going about it a bit differently and it was frustrating me! Thanks