Mogul Company ships merchandise to Ski Outfit in a consignment arrangement. The arrangement specifies that Ski...
Mogul Company ships merchandise to Ski Outfit in a consignment arrangement. The arrangement specifies that Ski Outfit will attempt to sell the merchandise, and in return, Mogul will pay to Ski Outfit a commission of 20% of the selling price on any merchandise sold. During the year, Mogul ships inventory with a cost of $92,000 to Ski Outfit and pays shipping costs of $16,400. By the end of the year, $72,000 of the merchandise has been sold to customers for a total of $97,000. Mogul allocates $12,000 of the shipping costs to inventory sold and the other $4,400 to inventory not sold. Mogul also paid advertising costs during the year of $16,000. What amount of inventory will Mogul report at year end?
Multiple Choice
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A $44,400.
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B $20,000.
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C $60,400.
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D $24,400.
Homework Answers
cost of goods = 92000+16400=108400
cost of goods s old = 72000+12000=84000
inventory =108400-84000
=24400$
commission is selling expense and will not form part of invenoty.
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Mogul Company ships merchandise to Ski Outfit in a consignment
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