Jill’s Dress Shop had a beginning balance in its inventory account of $49,000. During the accounting period Jill’s purchased $102,000 of inventory,

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.)


a.   Jill’s Dress Shop had a beginning balance in its inventory account of $49,000. During the accounting period Jill’s purchased $102,000 of inventory, returned $6,800 of inventory, and obtained $930 of purchases discounts. Jill’s incurred $1,360 of transportation-in cost and $780 of transportation-out cost. Salaries of sales personnel amounted to $40,000. Administrative expenses amounted to $44,600. Cost of goods sold amounted to $100,300.

b.    Ken’s Bait Shop had a beginning balance in its inventory account of $11,600. During the accounting period Ken’s purchased $51,300 of inventory, obtained $1,560 of purchases allowances, and received $540 of purchases discounts. Sales discounts amounted to $820. Ken’s incurred $1,260 of transportation-in cost and $440 of transportation-out cost. Selling and administrative cost amounted to $14,100. Cost of goods sold amounted to $37,500.

 

 

Explanation:

Computation of Ending Inventory
	Jill’s Dress Shop			Ken’s Bait Shop
Beginning balance in inventory	$	49,000		$	11,600
Plus: Purchases		102,000			51,300
Less: Purchase Returns and Allow.		(6,800	)		(1,560	)
Less: Purchases Discounts		(930	)		(540	)
Plus: Transportation-In Costs		1,360			1,260
Cost of Goods Available for Sale		144,630			62,060
Less: Cost of Goods Sold		(100,300	)		(37,500	)
Ending Inventory	$	44,330		$	24,560