Question

Smiley Manufacturing Company has the following account balances at year end:

Office supplies $ 3,000
Raw materials 21,000
Work-in-process 32,000
Finished goods 46,000
Prepaid insurance 5,000
What amount should Smiley report as inventories in its balance sheet?
a. $46,000.
b. $78,000.
c. $99,000.
d. $104,000.

Answer 1

Smiley Manufacturing Company should report $99,000 as inventories in its balance sheet.

Step-by-step explanation:

To determine the amount Smiley Manufacturing Company should report as inventories, we need to add together the balances of the raw materials, work-in-process, and finished goods accounts. The office supplies and prepaid insurance accounts are not considered part of inventories, as they are not materials or goods ready for sale.

Therefore, the inventories amount is calculated as follows:

• Raw materials: $21,000
• Work-in-process: $32,000
• Finished goods: $46,000

Adding these amounts together, we get $21,000 + $32,000 + $46,000 = $99,000. Therefore, Smiley Manufacturing Company should report $99,000 as inventories in its balance sheet. The correct answer is option c. $99,000.