Question

Saguaro Company updates its inventory perpetually. Its beginning inventory is $70,000, goods purchased during the period cost $240,000, and the cost of goods sold for the period is $280,000. What is the amount of the ending inventory?
a. $30,000.
b. $50,000.
c. $40,000.
d. $90,000.

Answer 1

Answer:

a. $30,000.

Explanation:

The computation of the ending inventory is shown below;

As we know that

Cost of goods sold = Beginning inventory + goods purchased - ending inventory

$280,000 = $70,000 + $240,000 - ending inventory

So,

ending inventory = $70,000 + $240,000 - $280,000

= $30,000

hence, the correct option is a.