Question

Northwest Fur Co. started the year with $96,000 of merchandise inventory on hand. During the year, $430,000 in merchandise was purchased on account with credit terms of 1/15, n/45. All discounts were taken. Northwest paid freight-in charges of $7,000. Merchandise with an invoice amount of $4,100 was returned for credit. Cost of goods sold for the year was $373,000. What is ending inventory?

Answer 1

Answer:

The a answer is $151,642

Explanation:

Cost of sales = opening/starting inventory plus purchases minus closing/ending inventory.

Therefore, closing/ending inventory = opening/starting inventory plus purchases minus cost of sales.

Opening inventory is $96,000

To determine purchases, we will factor in freight-in fee, merchandise return, discount received.

So purchase is:

Purchase on credit--------$430,000

Freight-in-----------------------$7,000

Merchandise return--------($4,100)

Discount received ([$430,000 - $4,100]x 1%)--------------------($4,259)

Purchase =$428,641

Cost of goods sold is $373,000

Therefore, ending or closing inventory is:

$96,000 + $428,641 - $373,000

=$151,642