Question

The december 31, 2024, year-end inventory balance of the almond corporation is $212,000. You have been asked to review the following transactions to determine if they have been correctly recorded. Goods shipped to almond f.o.b. destination on december 26, 2024, were received on january 2, 2025. The invoice cost of $31,000 is included in the preliminary inventory balance. At year-end, almond held $15,000 of inventory on consignment from the hardgrove company. This inventory is included in the preliminary inventory balance. On december 29, inventory costing $6,100 was shipped to a customer f.o.b. shipping point and arrived at the customer’s location on january 3, 2025. The inventory is not included in the preliminary inventory balance. At year-end, almond had inventory costing $16,000 on consignment with the juniper corporation. The inventory is not included in the preliminary inventory balance.

A) $222,100
B) $221,000
C) $221,900
D) $212,000

Answer 1

The correct inventory balance after reviewing the transactions is $171,100.

Step-by-step explanation:

The year-end inventory balance of the Almond Corporation is $212,000.

Let's review the transactions to determine if they have been correctly recorded:

1. Goods shipped to Almond F.O.B. destination on December 26, 2024, were received on January 2, 2025. The invoice cost of $31,000 is included in the preliminary inventory balance. Therefore, we need to subtract $31,000 from the preliminary inventory balance.
2. At year-end, Almond had inventory on consignment from the Hardgrove Company amounting to $15,000. This inventory is already included in the preliminary inventory balance, so we do not need to make any adjustments.
3. On December 29, $6,100 worth of inventory was shipped to a customer F.O.B. shipping point and arrived at the customer's location on January 3, 2025. Since this inventory is not included in the preliminary inventory balance, we need to add $6,100 to the preliminary inventory balance.
4. At year-end, Almond had inventory on consignment with the Juniper Corporation amounting to $16,000. This inventory is not included in the preliminary inventory balance, so we need to subtract $16,000 from the preliminary inventory balance.

Now, let's calculate the new inventory balance:

Initial inventory balance: $212,000

Adjustments:

• Subtract $31,000 (from transaction 1)
• Add $6,100 (from transaction 3)
• Subtract $16,000 (from transaction 4)

New inventory balance:

$212,000 - $31,000 + $6,100 - $16,000 = $171,100

Therefore, the correct inventory balance after reviewing the transactions is $171,100.