Question

Based on our understanding of inventory cost flows, and given the information listed below for the company's fiscal year 2018, determine beginning inventory in 2018. A physical count indicated that there was $30,000 of inventory on hand at December 31, 2018 (i.e., ending inventory) Sales Freight In Purchase Returns and Allowances Sales Returns Purchase Discounts Purchases Gross Profit Sales Discounts $317,000 $7,000 $8,000 $9,000 $4,000 $245,000 $75,000 $1,000 Select one: a. $36,000 b. $29,000 C. $21,000 d. $32,000 e. $22,000

Answer 1

Answer:

e. $22,000

Explanation:

The computation of the beginning inventory is shown below:

We know that,

Opening inventory + Purchase -   Purchase Discounts - Purchase Returns and Allowances + freight in + Gross profit = Sales - sales return - sales discount + ending inventory

Opening inventory + $245,000 - $4,000 - $8,000 + $7,000 + $75,000 = $317,000 - $9,000 - $1,000 + $30,000

Opening inventory + $315,000 = $337,000

So, the opening inventory equals to

= $22,000