Question

Cutup Retailers uses the periodic inventory system. Its beginning inventory was $13,000, purchases of inventory for the year were $60,000, and the cost of goods sold for the year was $47,000. What was Cutup's year-end inventory?

Answer 1

Cutup Retailers' year-end inventory is calculated by adding the beginning inventory ($13,000) and purchases ($60,000) then subtracting the cost of goods sold ($47,000), which results in a year-end inventory of $26,000.

Step-by-step explanation:

To determine Cutup Retailers' year-end inventory using the periodic inventory system, we start with the beginning inventory and add the purchases made throughout the year. We then subtract the cost of goods sold (COGS) to arrive at the year-end inventory value. The formula is as follows:

Year-End Inventory = Beginning Inventory + Purchases - Cost of Goods Sold

Using the figures provided:

Year-End Inventory = $13,000 (beginning inventory) + $60,000 (purchases) - $47,000 (cost of goods sold)

Year-End Inventory = $13,000 + $60,000 - $47,000

Year-End Inventory = $73,000 - $47,000

Year-End Inventory = $26,000

Therefore, Cutup Retailers' year-end inventory is $26,000.