For Each of the Following, Calculate the Cost of Inventory

question 150

Short Answer

For each of the following, calculate the cost of inventory reported on the balance sheet.
(a)The total merchandise on hand at the end of the year is $62,000. Of the $62,000, $8,000 has been sold FOB destination and is awaiting pickup by the carrier.
(b)The total merchandise inventory at the end of the year was $63,000. Excluded from the amount were purchases of $6,000 in transit under FOB shipping point terms.
(c)The total merchandise inventory at the end of the year was $75,000. Excluded from the amount were purchases of $5,000 in transit under FOB destination terms.

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Definitions:

Demand Curve

A graphical representation that shows the relationship between the price of a good and the quantity demanded by consumers at those prices, typically downward sloping.

Monopolist

A monopolist is a producer or provider who has exclusive control over the supply of a particular good or service, enabling them to significantly influence or set prices.

Profit-Maximizing

A strategy adopted by businesses aiming to achieve the highest possible profit given the constraints they face.

Quantities

Numerical amounts or counts of items, goods, or materials.