Question

You are provided with the following information on Tapioca Resort Inn:

Beginning inventory$40,000
Purchases$30,000
Ending inventory$55,000
Employee meals$1,000
Transfer to Food & Beverage Department$1,500
The goods are sold for $30,000. However, upon a deeper inspection, you noticed that your beginning inventory should have been $45,000 instead of $40,000. Based on the available information, you calculate that the profit for this hotel was:

Answer 1

The adjusted accounting profit for Tapioca Resort Inn is $11,500 after correcting the beginning inventory from $40,000 to $45,000 and accounting for purchases, ending inventory, employee meals, and transfer to Food & Beverage Department.

Step-by-step explanation:

The student's question pertains to calculating the profit for Tapioca Resort Inn with an adjustment in beginning inventory. The correct calculation takes into account the restated beginning inventory value, along with purchases, ending inventory, and the goods sold. To calculate the profit, we use the formula for accounting profit which is total revenues minus explicit costs. Considering the corrected beginning inventory, the calculation is as follows:

• Opening Inventory (corrected): $45,000
• Add: Purchases: $30,000
• Less: Ending Inventory: $55,000
• Less: Employee meals: $1,000
• Less: Transfer to Food & Beverage Department: $1,500
• Cost of Goods Sold (COGS): $18,500
• Total Revenues (from goods sold): $30,000
• Accounting Profit: Total Revenues - COGS = $30,000 - $18,500 = $11,500

Therefore, the profit for Tapioca Resort Inn, after correcting the beginning inventory value, is $11,500.