For each of the following cases determine the ending balance in the inventory account. (Hint First,...

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For each of the following cases determine the ending balance in the inventory account. (Hint First, determine the total cost

business accounting

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Answer 1

Answer #1

Calculation of cost of goods available for sale for Jill's

Particulars

Amount

Remarks

Opening Inventory

52500

Add:

Inventory Pucrhased

112500

Less:

Inventory returned

-7500

LesS:

Purchase discount

-1000

Add:

Transportation In Cost

1500

(Only transportation in cost forms parts of inventory value. Transport out cost is selling expense and not inventory cost)

Salary of sales personal

(Salary of sales personal is not a part of inventory cost. It is selling expense.)

Administrative expense

(Administrative cost Is not part of inventory cost)

Cost of goods available for sale

158000

Less: Cost of goods sold

-107300

Ending Inventory

50700

Calculation of cost of goods available for sale for Ken's

Particulars

Amount

Remarks

Opening Inventory

13000

Add:

Inventory Pucrhased

56900

Less:

Purchase allowances

-1700

LesS:

Purchase discount

-610

(sales discount is not part of inventory cost)

Add:

Transportation In Cost

1400

(Only transportation in cost forms parts of inventory value. Transport out cost is selling expense and not inventory cost)

Salary of sales personal

(Salary of sales personal is not a part of inventory cost. It is selling expense.)

Administrative expense

(Administrative cost Is not part of inventory cost)

Cost of goods available for sale

68990

Less: Cost of goods sold

-38900

Ending Inventory

30090

Jill's Dress Shop

Ken's Bait Shop

Cost of goods available for sale

158000

68990

Ending Inventory

50700

30090

Tutorial Note: All expense incurred upto the time goods become available for sale i.e. from vendor's place to our godown is considered under inventory cost.

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Answer 2

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For each of the following cases determine the ending balance in the inventory account. (Hint First,...

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