Answer:
Inventory shortage 22,500 dollars
Step-by-step explanation:
December 31: Inventory, January 1 $ 325,000
Purchases $ 1,150,000
Purchase returns $ (40,000)
Freight in $ (30,000)
Total Goods available for sale $ 1,405,000
Sales 1,700,000
Sales discounts (10,000)
Sales returns (15,000)
Net Sales: 1,675,000
Gross profit 30%
COGS 70%
1,675,000 x 70% = 1,172,500
On December 31, a physical inventory revealed that the ending inventory was only $210,000
Total Goods available for sale $ 1,405,000
COGS $ (1, 172,500)
Ending Inventory $ (210,000)
Inventory shortage $ 22,500