Question

Ending Inventory On January 1, Pope Enterprises' inventory was $625,000. Pope made $950,000 of net purchases during the year. On its year-end income statement, Pope reported cost of goods sold of $1,025,000. Calculate Pope's December 31 ending inventory.

Answer 1

Answer:

Closing Inventory = $550000

Explanation:

The cost of the closing inventory at December 31 can be calculated by taking the trading part of the income statement where we calculate the cost of the goods sold. The cost of the goods sold is the cost associated with the sale of goods made during the year. The cost of the goods sold is calculated as follows,

Cost of Goods sold = Opening Inventory + Purchases - Closing Inventory

Plugging in the values of Cost of goods sold, opening inventory and purchases, we can calculate the closing inventory.

1025000 = 625000 + 950000 - Closing Inventory

Closing Inventory = 1575000 - 1025000

Closing Inventory = $550000