Honest Tea, Inc. is a merchandiser. Use the following information to its Inventory balance on its December 31 year-end balance sheet. Note: All purchases of inventory are on account. Cost of Goods Sold during the year January 1 Inventory Sales during the year December 31 Accounts Receivable Purchases of Inventory on Account during the year December 31 Inventory = $. $34,000 10,000 77,000 24,000 35,000
Honest Tea, Inc. is a merchandiser. Use the following information to its Inventory balance on its December 31 year-end balance sheet. Note: All purchases of inventory are on account. Cost of Goods Sold during the year January 1 Inventory Sales during the year December 31 Accounts Receivable Purchases of Inventory on Account during the year December 31 Inventory = $. $34,000 10,000 77,000 24,000 35,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![### Honest Tea, Inc. - Inventory Balance Calculation
**Scenario Overview:**
Honest Tea, Inc. is a merchandiser. The following financial details are provided to determine the inventory balance on the December 31 year-end balance sheet. Note that all purchases of inventory are on account.
**Given Information:**
| **Description** | **Amount** |
|-------------------------------------------------|--------------|
| Cost of Goods Sold during the year | $34,000 |
| January 1 Inventory | $10,000 |
| Sales during the year | $77,000 |
| December 31 Accounts Receivable | $24,000 |
| Purchases of Inventory on Account during the year | $35,000 |
| December 31 Inventory | $______ |
**How to Calculate the December 31 Inventory:**
1. **Start with the Beginning Inventory (January 1):** This is the inventory amount at the beginning of the year.
2. **Add Purchases of Inventory:** This includes all purchases made during the year.
3. **Subtract Cost of Goods Sold:** This represents the cost associated with the goods that were sold during the year.
**Formula:**
\[ \text{December 31 Inventory} = \text{January 1 Inventory} + \text{Purchases of Inventory} - \text{Cost of Goods Sold} \]
**Calculation Steps:**
1. Beginning Inventory (January 1): $10,000
2. Add Purchases during the year: $35,000
3. Subtotal: $10,000 + $35,000 = $45,000
4. Subtract Cost of Goods Sold: $45,000 - $34,000 = $11,000
**Conclusion:**
The December 31 Inventory for Honest Tea, Inc. is **$11,000**.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5c8d4a85-4f6d-419d-9725-6a01dd6ff781%2Fe2a51e36-92c8-4d9a-8f8d-dfc06d75149c%2F1yc7tms_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Honest Tea, Inc. - Inventory Balance Calculation
**Scenario Overview:**
Honest Tea, Inc. is a merchandiser. The following financial details are provided to determine the inventory balance on the December 31 year-end balance sheet. Note that all purchases of inventory are on account.
**Given Information:**
| **Description** | **Amount** |
|-------------------------------------------------|--------------|
| Cost of Goods Sold during the year | $34,000 |
| January 1 Inventory | $10,000 |
| Sales during the year | $77,000 |
| December 31 Accounts Receivable | $24,000 |
| Purchases of Inventory on Account during the year | $35,000 |
| December 31 Inventory | $______ |
**How to Calculate the December 31 Inventory:**
1. **Start with the Beginning Inventory (January 1):** This is the inventory amount at the beginning of the year.
2. **Add Purchases of Inventory:** This includes all purchases made during the year.
3. **Subtract Cost of Goods Sold:** This represents the cost associated with the goods that were sold during the year.
**Formula:**
\[ \text{December 31 Inventory} = \text{January 1 Inventory} + \text{Purchases of Inventory} - \text{Cost of Goods Sold} \]
**Calculation Steps:**
1. Beginning Inventory (January 1): $10,000
2. Add Purchases during the year: $35,000
3. Subtotal: $10,000 + $35,000 = $45,000
4. Subtract Cost of Goods Sold: $45,000 - $34,000 = $11,000
**Conclusion:**
The December 31 Inventory for Honest Tea, Inc. is **$11,000**.
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