Use the Chart Provided Below to Determine the Impact of a Company

question 23

Essay

Use the chart provided below to determine the impact of a company expensing $4,000 transportation costs related to the purchase of its inventory. At year end, the company had sold 50% of the affected inventory items.
$$\begin{array} { | l | l | l | } \hline \text { Goods included in inventory count } & \\\hline \text { Purchases recorded during the year } &\\\hline \text { Transportation costs included in inventory }&\\\hline & 2020 & 2021 \\\hline \text { Beginning inventory } & & \\\hline + \text { Purchases } & & \\\hline \text { -Ending inventory } & & \\\hline \text { =Cost of goods sold } & & \\\hline & & \\\hline \text {Operating expense } &\text{NA} &\text{NA} \\\hline \text { Net income } & --- &---\\\hline & & \\\hline \text { Assets } & & \\\hline \text { Liabilities } & & \\\hline \text { Equity } & &\\\hline\end{array}$$

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Definitions:

Risk-Free Asset

An investment that is considered to have negligible risk of financial loss, typically government bonds of stable countries.

Capital Allocation Line

A line representing the risk-return trade-off of different portfolios, showing the highest expected return for a given level of risk.

Standard Deviation

A measure of the dispersion or variation in a set of values, indicating how much the values differ from the mean of the set.

Complete Portfolio

A portfolio that includes both risky assets and a risk-free asset, optimizing the balance between risk and return.