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eturned $5,500 of inventory, and obtainee nsportation-out cost. Salaries of sales personnel amounted to $33,50 sold amounted to $87,300.

eturned $5,500 of inventory, and obtainee nsportation-out cost. Salaries of sales personnel amounted to $33,50 sold amounted to $87,300.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Inventory Accounting Exercise For each of the following cases, determine the ending balance in the inventory account. (Hint: First, determine the total cost of inventory available for sale. Next, subtract the cost of the inventory sold to arrive at the ending balance.) #### Case a: Jill’s Dress Shop Jill’s Dress Shop had a beginning balance in its inventory account of $42,500. During the accounting period, Jill’s purchased $82,500 of inventory, returned $5,500 of inventory, and obtained $800 of purchase discounts. Jill’s incurred $1,100 of transportation-in cost and $650 of transportation-out cost. Salaries of sales personnel amounted to $33,500. Administrative expenses amounted to $38,100. Cost of goods sold amounted to $87,300. #### Case b: Ken’s Bait Shop Ken’s Bait Shop had a beginning balance in its inventory account of $9,000. During the accounting period, Ken’s purchased $40,900 of inventory, obtained $1,300 of purchase allowances, and received $410 of purchase discounts. Sales discounts amounted to $690. Ken’s incurred $1,000 of transportation-in cost and $310 of transportation-out cost. Selling and administrative costs amounted to $12,800. Cost of goods sold amounted to $34,900. #### Summary Table | **Item** | **Jill’s Dress Shop** | **Ken’s Bait Shop** | |-------------------------------|-----------------------|---------------------| | Cost of goods available for sale | | | | Ending Inventory | | | --- ### Explanation of the Summary Table The table above provides a structured format to input the final calculated values for both Jill’s Dress Shop and Ken’s Bait Shop. These values will include: 1. **Cost of Goods Available for Sale:** This is determined by adding the beginning inventory to the total purchases (adjusted for returns, allowances, discounts, and transportation-in costs). 2. **Ending Inventory:** This is the result of subtracting the cost of goods sold from the cost of goods available for sale. Utilize this table to input the calculated figures, aiding in the comparison and summarization of the inventory balances for the given cases.
Transcribed Image Text:### Inventory Accounting Exercise For each of the following cases, determine the ending balance in the inventory account. (Hint: First, determine the total cost of inventory available for sale. Next, subtract the cost of the inventory sold to arrive at the ending balance.) #### Case a: Jill’s Dress Shop Jill’s Dress Shop had a beginning balance in its inventory account of $42,500. During the accounting period, Jill’s purchased $82,500 of inventory, returned $5,500 of inventory, and obtained $800 of purchase discounts. Jill’s incurred $1,100 of transportation-in cost and $650 of transportation-out cost. Salaries of sales personnel amounted to $33,500. Administrative expenses amounted to $38,100. Cost of goods sold amounted to $87,300. #### Case b: Ken’s Bait Shop Ken’s Bait Shop had a beginning balance in its inventory account of $9,000. During the accounting period, Ken’s purchased $40,900 of inventory, obtained $1,300 of purchase allowances, and received $410 of purchase discounts. Sales discounts amounted to $690. Ken’s incurred $1,000 of transportation-in cost and $310 of transportation-out cost. Selling and administrative costs amounted to $12,800. Cost of goods sold amounted to $34,900. #### Summary Table | **Item** | **Jill’s Dress Shop** | **Ken’s Bait Shop** | |-------------------------------|-----------------------|---------------------| | Cost of goods available for sale | | | | Ending Inventory | | | --- ### Explanation of the Summary Table The table above provides a structured format to input the final calculated values for both Jill’s Dress Shop and Ken’s Bait Shop. These values will include: 1. **Cost of Goods Available for Sale:** This is determined by adding the beginning inventory to the total purchases (adjusted for returns, allowances, discounts, and transportation-in costs). 2. **Ending Inventory:** This is the result of subtracting the cost of goods sold from the cost of goods available for sale. Utilize this table to input the calculated figures, aiding in the comparison and summarization of the inventory balances for the given cases.
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