Question

Northwest Fur Co. started 2018 with $109,000 of merchandise inventory on hand. During 2018, $470,000 in merchandise was purchased on account with credit terms of 3/15, n/45. All discounts were taken. Purchases were all made f.o.b. shipping point. Northwest paid freight charges of $9,300. Merchandise with an invoice amount of $3,600 was returned for credit. Cost of goods sold for the year was $378,000. Northwest uses a perpetual inventory system. What is ending inventory assuming Northwest uses the gross method to record purchases

Answer 1

Answer:

$192,708

Explanation:

Northwest Fur Co

Beginning inventory$109,000

Inventory purchased $470,000

Freight-in $9,300

Merchandise returned(3,600)

Discounts [($470,000 − $3,600) × 3%)] ($13,992)

Cost of goods available for sale$570,708

Cost of goods sold $378,000

Ending inventory$192,708

Therefore the ending inventory assuming Northwest uses the gross method to record purchases will be $192,708