Answer the Questions Below Based on the Following Data (In $\begin{array} { l } \text { Purchases}&\$160\\ \text { Beginning inventory}&32\\ \text {Ending inventory }&48\\\end{array}$

question 46

Essay

Answer the questions below based on the following data (in 000's): $\begin{array} { l } \text { Purchases}&\$160\\ \text { Beginning inventory}&32\\ \text {Ending inventory }&48\\\end{array}$
(a) What amount of sales would produce a gross margin of 35 percent based on cost of goods sold? $______________________________.
(b) What amount of sales would produce a gross margin of 40 percent based on sales? $______________________________.

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Definitions:

Credit Memo

A credit memo is a document issued by a seller to a buyer, reducing the amount that the buyer owes the seller under the terms of an earlier invoice.

Perpetual Inventory System

An accounting method that records the sale or purchase of inventory immediately through computerized point-of-sale systems and Enterprise Resource Planning systems.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made at specific intervals, rather than continuously.

Purchases Discounts

Purchases discounts are reductions in price given by suppliers to buyers for early payment of invoices.