The Constance Corporation’s inventory at December 31, 2021, was $130,000 (at cost) based on a physical...
The Constance Corporation’s inventory at December 31, 2021, was $130,000 (at cost) based on a physical count of inventory on hand, before any necessary adjustment for the following:
- Merchandise costing $20,000, shipped f.o.b. shipping point from a vendor on December 27, 2021, was received by Constance on January 5, 2022.
- Merchandise costing $50,000 was shipped to a customer f.o.b. shipping point on December 28, 2021, arrived at the customer’s location on January 6, 2022.
- Merchandise costing $26,000 was being held on hand for Jess Company on consignment.
- Estimated sales returns are 15% of annual sales. Sales revenue was $560,000 with a gross profit ratio of 20%.
What amount should Constance Corporation report as inventory in its
December 31, 2021, balance sheet?
Multiple Choice
-
A $223,325.
-
B $191,200.
-
C $221,200.
-
D $171,200.
Homework Answers
| Inventory as per physical count | 130000 | |
| Add: Merchandise shipped f.o.b. shipping point | 20000 | |
| Less: Merchandise on consignment | -26000 | |
| Add: Estimated returns | 67200 | =(560000*15%)*(1-20%) |
| Inventory to be reported | 191200 | |
| Option B $191,200 is correct |
Add Answer to:
The Constance Corporation’s inventory at December 31, 2021, was
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