Question

A company began its fiscal year with inventory of $201,000. Purchases and cost of goods sold for the year were $960,000 and $994,000, respectively. What was the amount of ending inventory?

A) $193,000

B) $167,000

C) $267,000

D) $201,000

Answer 1

The company's ending inventory is calculated using the formula: Beginning Inventory + Purchases - Cost of Goods Sold and is found to be $167,000, which is option B.

Step-by-step explanation:

The calculation of ending inventory can be determined through the formula: Beginning Inventory + Purchases - Cost of Goods Sold = Ending Inventory.

For the company in question:

• Beginning Inventory = $201,000
• Purchases = $960,000
• Cost of Goods Sold = $994,000

When we plug these values into the formula, we get:
$201,000 + $960,000 - $994,000 = $167,000

Therefore, the amount of ending inventory is $167,000, which corresponds to option B.