Answer and Explanation:
The Preparation of the table that shows the balances from a to d points is shown below:-
Particulars Inventory Cost of goods sold
For the year ended Reported
on December 31 $85,000 $450,000
a. Less: Lenses held on
consignment ($13,000)
b. Less: Office supplies ($6,500)
c. Add: Lenses in the
warehouse $9,500 ($9,500)
d. Less: Inventory which is damaged with
no scrap value ($3,750)
Balance $71,250 $440,500
Therefore to reach the balance of inventory we simply added the reported ended on Dec 31 and lenses which is in warehouse and deduct the lenses held on consignment, office supplies and inventory which is damaged with no scrap value on the other hand to reach the cost of good sold we simply deduct the lenses in the warehouse from the year ended which is reported on Dec 31.
Also the explanation from a to d is shown below:-
a. Goods kept on consignment shall form part of the inventory of consignors until such time as they are sold. And when recording it should be removed from the inventory of consignees.
b. Office supplies are not part of an inventory firm
c. Sold items that are in the seller's hands and yet to be supplied (risk is still with the seller) are exempt from revenue and included in the inventory of companies.
d. Damaged, non-returnable items should be eliminated from inventory and reported as loss.
