Question

If cost of goods sold is $12,000 and the ending inventory balance is $6,000, the

a. Beginning inventory is $18,000
b. Net income is $6,000
c. Cost of goods available for sale is $18,000
d. Purchases are $6,000

Answer 1

If the cost of goods sold is $12,000 and the ending inventory balance is $6,000, we cannot determine the exact beginning inventory without knowing the value of purchases.

Step-by-step explanation:

If the cost of goods sold is $12,000 and the ending inventory balance is $6,000, we can calculate the beginning inventory by using the formula: Beginning inventory + Purchases - Cost of goods sold = Ending inventory. Rearranging the formula, we have: Beginning inventory = Ending inventory + Cost of goods sold - Purchases. Since we are given the ending inventory ($6,000) and the cost of goods sold ($12,000), we can substitute these values into the formula: Beginning inventory = $6,000 + $12,000 - Purchases. We don't have the value of purchases, so we cannot determine the exact beginning inventory.

Therefore, the correct answer is a. Beginning inventory is $18,000.