Question

On December 24, 2022, Vittoria Co. purchased merchandise worth $50,000 on account. Terms are 2/10, n/30; FOB Destination. As of December 31, the goods are still in transit. As per inventory count, goods on hand amount to $500,000. Question: How much is the correct amount of ending inventory?

Answer 1

The correct amount of ending inventory cannot be determined without the cost of goods sold.

Step-by-step explanation:

The correct amount of ending inventory can be calculated by subtracting the cost of goods sold from the total cost of goods available for sale. In this case, the cost of goods sold is not provided, so we will use the formula:

Ending Inventory = Total Cost of Goods Available for Sale - Cost of Goods Sold

The Total Cost of Goods Available for Sale is the sum of the purchase cost of the merchandise and the cost of goods on hand:

Total Cost of Goods Available for Sale = Purchases + Cost of Goods on Hand

Given that the merchandise purchased on account is $50,000 and the cost of goods on hand is $500,000, we can calculate the Total Cost of Goods Available for Sale:

Total Cost of Goods Available for Sale = $50,000 + $500,000 = $550,000

Without the cost of goods sold, we cannot determine the ending inventory. The cost of goods sold is needed to complete the calculation.