The correct balance for Base Industries’ inventory account is $78,930
The correct computation for base industries account should be as follows:
Ending inventory balance - FOB destination goods purchased - goods being held on consignment
Therefore we have:
$87,500 - $7,525 - $1,045
= $78,930
<h2>Further Explanation</h2>
Some records should not be included in the merchandise inventory account.
- The goods held on consignment for the western company should not be included in the inventory account because the goods are yet to be delivered to base industries, which means that it is owned by the western company. Therefore, the balance sheet is -$7,525
- Also, the goods that were purchased FOB destination were still in transits can be claimed yet by Base industries, that is, since Base industry is yet to receive the goods, then the goods are still owned by the seller and should not be included in the balance sheet. Therefore, the balance is - -$1,045
Thus, the correct balance for Base Industries’ inventory account is $78,930
Inventory accounts refer to the aspect of accounting which involves valuing and accounting for items that a company’s plan to sell for profit.
A company’s inventory deals with the goods that are involved in three stages of production and these include
- Raw goods or production materials
- In-progress goods
- Finished goods that can put out for sale
LEARN MORE:
- On December 31 of the current year, Plunkett Company reported an ending inventory balance of $215,500 brainly.com/question/13221593
- Coronado Industries took a physical inventory on December 31 and determined that goods costing $180,500 were on hand. Not included in the physical brainly.com/question/13838503
KEYWORDS:
- balance sheet
- list inventory
- base industries
- FOB shipping point
- inventory account
