Question

Mogul Company ships merchandise to Ski Outfit in a consignment arrangement. The arrangement specifies that Ski Outfit will attempt to sell the merchandise, and in return, Mogul will pay to Ski Outfit a 15% sales commission on any merchandise sold. During the year, Mogul ships inventory with a cost of $85,000 to Ski Outfit. By the end of the year, $64,000 of the merchandise has been sold to customers for a total of $90,200. What amount of inventory will Mogul report at year end?
A. $0.
B. $5,200.
C. $12,750.
D. $21,000.

Answer 1

Answer:

correct option is D. $21,000

Explanation:

given data

sales commission = 15%

cost of inventory sent to consignee = $85,000

Cost of inventory sold by consignee = $64,000

total  = $90,200

solution

we get here inventory at the year end that is express as

inventory at the year end = Cost of inventory sent to consignee - Cost of inventory sold by consignee    ............................1

put here value and we will get

inventory at the year end = $85,000 - $64,000

inventory at the year end = $21,000

so correct option is D. $21,000