Question

A company started the year with "$185,000 of goods finished" and ready for sale. During the year, a total of $700,000 of goods were started in production. Of the goods started, $550,000 were finished during the year. If total cost of goods sold for the year equals $625,000, the company's ending finished goods inventory equals ______.

Answer 1

Answer:

$110,000

Explanation:

The closing balance in the finished goods inventory account is a function of the opening balance and the net movement that occurred during the year.

As such, the closing balance

= opening balance + purchases/production - sales

Given;

opening balance = $185,000

purchases/production = $550,000

sales = $625,000

Therefore,

closing balance in the finished goods = $185,000 + $550,000 - $625,000

= $110,000