Question

Bedrock Company reported a December 31 ending inventory balance of $414,000. The following additional information is also available: The ending inventory balance of $414,000 included $72,400 of consigned inventory for which Bedrock was the consignor. The ending inventory balance of $414,000 included $22,800 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and managers during the coming year. Based on this information, the correct balance for ending inventory on December 31 is: Multiple Choice a.$362,800 b.$247,000 c.$342,200 d.$391,200

Answer 1

Answer:

The corrected balance of ending inventory is $391200 and option d is the correct answer.

Explanation:

The amount of goods sent on consignment by Bedrock of $72400 are already included in the inventory value. These goods belong to Bedrock, the consignor, until they are sold off by the consignee. Thus, no adjustment is needed for this amount.

The ending inventory balance only needs one adjustment that is for office supplies. The office supplies are office consumables and a separate asset than the inventory of the business which is solely for the purpose of selling operations. Thus, the office supplies amount will be deducted from the inventory value.

The correct balance = 414000 - 22800 = $391200