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O Level Accounting (7707)•7707/11/M/J/22
Question 30 from 7707/11/M/J/22

Explanation

Inventory Turnover Determines Purchases via COGS

Steps:

  • Compute average inventory: (8000+8000 + 8000+6000) / 2 = $7000.
  • Compute COGS using turnover rate: 5 × 7000=7000 = 7000=35000.
  • Rearrange COGS formula: Purchases = COGS + Closing inventory - Opening inventory.
  • Solve for purchases: 35000+35000 + 35000+6000 - 8000=8000 = 8000=33000.

Not enough information: Calculated purchases are $33000, not matching any option; problem appears ambiguous or erroneous.

Final answer: Not enough information.

Topic: Calculation and understanding of accounting ratios

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