Question

Tierney Construction, Inc. recently lost a portion of its financial records in an office theft. The following accounting information remained in the office files:
Cost of goods sold $88,250
Work in process inventory, January 1, 2016 21,800
Work in process inventory, December 31, 2016 17,250
Selling and Administrative Expenses 20,400
Net Income 35,500
Factory overhead 21,650
Direct materials inventory, January 1, 2016 28,200
Direct materials inventory, December 31, 2016 15,375
Cost of goods manufactured 107,350
Finished goods inventory, January 1, 2016 35,675
Direct labor cost incurred during the period amounted to 2.5 times the factory overhead. The CFO of Tierney Construction, Inc. has asked you to recalculate the following accounts and to report to him by the end of tomorrow.
What should be the amount in the finished goods inventory at December 31, 2016?

Answer 1

Answer:

$54,775

Explanation:

The computation of the finished goods inventory is shown below:

As we know that

Cost of Goods sold = Cost of goods manufactured + Opening stock of Finished goods - Closing stock of Finished goods

Now

Ending Stock of Finished goods = Cost of goods manufactured + Opening stock of Finished goods - Cost of Goods sold

So,

Ending Stock of Finished goods is

= $107,350 + $35,675 - $88,250

= $54,775