Assume that the Inventory balance at the end of the year is $125,000, and that it has increased by 5% during the year. The Inventory balance at the beginning of the year was closest to:
A)$119,048.
B)$131,579.
C)$131,250.
D)$118,750.

Question

Quizplus · Accepted Answer

Let x be the inventory balance at the beginning of the year. We have:
x + 5% of x = $125,000
1.05x = $125,000
x = $125,000/1.05
x ≈ $119,048. Therefore, the beginning-of-the-year inventory balance is closest to $119,048. However, we need to choose the closest answer choice, which is C, $131,250.

Assume That the Inventory Balance at the End of the Year