Item 7 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 $80,000 to Ski Outfit and pays shipping costs of $8,000. By the end of the year, $60,000 of the merchandise has been sold to customers for a total of $85,000. Mogul allocates $6,000 of the shipping costs to inventory sold and the other $2,000 to inventory not sold. Mogul also paid advertising costs during the year of $10,000. What amount of inventory will Mogul report at year end? Multiple Choice $20,000. $22,000. $42,000. $52,000.
Item 7
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 $80,000 to Ski Outfit and pays shipping costs of $8,000. By the end of the year, $60,000 of the merchandise has been sold to customers for a total of $85,000. Mogul allocates $6,000 of the shipping costs to inventory sold and the other $2,000 to inventory not sold. Mogul also paid advertising costs during the year of $10,000. What amount of inventory will Mogul report at year end?
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$20,000.
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$22,000.
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$42,000.
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$52,000.
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