Question

Ralph’s Mini-Mart store in Alpine experienced the following events during the current year:1. Incurred $270,000 in selling costs.2. Incurred $180,000 of administrative costs.3. Purchased $870,000 of merchandise.4. Paid $30,000 for transportation-in costs.5. Took an inventory at year-end and learned that goods costing $140,000 were on hand. This compared with a beginning inventory of $225,000 on January 1.6. Determined that sales revenue during the year was $2,600,000.7. Debited all costs incurred to the appropriate account and credited to Accounts Payable. All sales were for cash.Required:Give the amounts for the following items in the Merchandise Inventory account:a. Beginning balance ?b. Transfers-in(TI) ?c. Ending balance (EB)?d. Transfer out (TO)

Answer 1

Answer:

a. $225, 000

b. $900, 000

c. $140, 000

Explanation:

Ralph Mini-Mart Store in Alpine:

(a) Beginning inventory: this is the value of inventory on hand at the beginning of the financial year. This is the value is the same as the value of ending inventory at the end of the previous financial year. This value includes the value of the inventory and any costs that were incurred to bring the inventory to the organization’s store house.  

For Ralph Mini- Mart, beginning inventory = $225, 000 (refer to item 5)

(b) Transfers- In: this is the inventory that was purchased during the financial year. This value will include the cost of the inventory and any other costs that were incurred to bring the inventory to the store house of Ralph’s Mini – Mart. In this instance, the additional cost is the transportation cost of $30, 000 that was incurred to transport the inventory from the supplier to the warehouse.  

For Ralph’s Mini – Mart, the Transfers – In = $870, 000 + $30, 000 = $900, 000 (refer to item 3 and 4)

(c) Ending balance: the ending balance is the value of inventory at the end of the financial year. This is the value of inventory that Ralph’s remains with after purchasing inventory from suppliers and selling inventory to customers. This value will take into account any inventory write- downs and obsolescence. In this instance, there has been no inventory write- downs and no inventory obsolescence or thefts.  

For Ralph’s Mini – Mart, the value of ending inventory = $140, 000 (refer to item 5)