Question

Given is selected information from Nathaniel’s Service Shop's June Income Statement and Statement of Cost of Goods Manufactured:

Cost of goods sold $115,000
Cost of goods manufactured $105,000
Finished goods inventory, June 30 $ 20,000
Nathaniel's Service Shop's finished goods inventory, on June 1, was:
A.35,000
B.20,000
C.30,000
D.40,000

Answer 1

The finished goods inventory on June 1 at Nathaniel's Service Shop was $30,000. This is calculated by subtracting cost of goods manufactured from the ending inventory and adding the cost of goods sold.

Step-by-step explanation:

To find Nathaniel's Service Shop's finished goods inventory on June 1, we need to work backwards from the available data. Using the formula:

Beginning Inventory + Cost of Goods Manufactured - Cost of Goods Sold = Ending Inventory,

we can determine the beginning inventory. Plugging in the numbers:

• Cost of goods sold: $115,000
• Cost of goods manufactured: $105,000
• Finished goods inventory, June 30 (Ending Inventory): $20,000

Let's rearrange the formula to solve for the beginning inventory (June 1):

• Beginning Inventory = Ending Inventory - Cost of Goods Manufactured + Cost of Goods Sold
• Beginning Inventory = $20,000 - $105,000 + $115,000
• Beginning Inventory = $30,000

Therefore, the correct answer is C. $30,000.