Question

Villa Sales Company had the following amounts related to its business: Beginning inventory, $12,000; Purchases, $42,000; Net sales, $50,000; and Gross profit, $15,000. The amount of the ending inventory is $54,000. $77,000. $35,000. $19,000.

Answer 1

Answer:

The correct answer is $19,000

Explanation:

In order to compute the ending inventory, first need to compute the COGS (Cost of goods Sold) formula, which as:

COGS (Cost of Goods Sold) = Net Sales - Gross Profit

where

Net Sales is $50,000

Gross Profit is $15,000

Putting the values above:

COGS = $50,000 - $15,000

COGS = $35,000

Now, computing the ending inventory as:

Ending Inventory = Beginning or Starting Inventory + Cost of goods purchases  or Purchases - COGS

Ending Inventory = $12,000 + $42,000 - $35,000

Ending Inventory = $54,000 - $35,000

Ending Inventory = $19,000